Registration No. 33-02769
File No. 811-4563
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 21 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 20 / X /
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
- --------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
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(Address of Principal Executive Offices)
1-303-671-3200
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(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate
box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On February 1, 1996 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ------- pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ------- pursuant to paragraph (a)(2)
of rule 485.
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The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended September 30, 1995, was filed on November 30, 1995.
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FORM N-1A
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses
3 Financial Highlights; Performance of the Fund
4 Cover Page; Investment Objective and Policies
5 Expenses; How the Fund is Managed
5A Performance of the Fund
6 Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special Investor
Services; Service Plan for Class A Shares; Distribution and
Service Plan for Class B Shares; Distribution and Service
Plan for Class C shares; How to Sell Shares
8 How to Sell Shares; How to Exchange Shares; Special Investor
Services
9 *
Part B of
Form N-1A
Item No. Statement of Additional Information Heading
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Restrictions
14 Trustees and Officers of the Fund; How the Fund is Managed
15 Trustees and Officers of the Fund - Major Shareholders; How
the Fund is Managed
16 How the Fund is Managed; Distribution and Service Plans;
Additional Information about the Fund; Back Cover
17 How the Fund is Managed; Brokerage Policies of the Fund
18 Additional Information about the Fund
19 About Your Account - How to Buy Shares, How to Sell Shares,
How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 Distribution and Service Plans; How the Fund is Managed;
Additional Information about the Fund; Financial Statements
22 Dividends, Capital Gains and Taxes
23 Financial Statements
___________________
*Not applicable or negative answer.
<PAGE>
Oppenheimer
Limited-Term Government Fund
Prospectus dated February 1, 1996
Oppenheimer Limited-Term Government Fund (the "Fund") is a mutual fund
that seeks high current return and safety of principal. In seeking its
objective, the Fund invests principally in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
including mortgage-backed securities issued by Government National
Mortgage Association ("GNMA"). The Fund also uses "hedging" instruments
to seek to reduce the risks of market and interest rate fluctuations that
affect the value of the securities the Fund holds.
While payments of principal and interest on certain U.S. Government
securities are guaranteed by the U.S. Government or its agencies or
instrumentalities, the net asset values of shares of the Fund and the
Fund's dividends are not guaranteed, and will fluctuate.
Under normal circumstances, the Fund seeks to maintain an average
effective portfolio duration (measured on a dollar-weighted basis) of not
more than three years. Please refer to "Investment Policies and
Strategies" for more information about the types of securities the Fund
invests in and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the February 1, 1996 Statement of Additional Information. For a
free copy, call OppenheimerFunds Services, the Fund's Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(Oppenheimer funds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
Expenses
Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
A B O U T Y O U R A C C O U N T
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
By Check Writing
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A : Special Sales Charge Arrangements
<PAGE>
A B O U T T H E F U N D
Expenses
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales
charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended September 30, 1995.
- Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" starting
on page ___ for an explanation of how and when these charges apply.
Class A Class B Class C
Shares Shares Shares
- ----------------------------------------------------------------------
Maximum Sales 3.50% None None
Charge on
Purchases (as a %
of offering price)
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Sales Charge on None None None
Reinvested
Dividends
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Deferred Sales None(1) 4% in the 1% if
Charge (as a % first year, shares are
of the lower declining redeemed
of the original to 1% in the within 12
purchase price fifth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)
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Exchange Fee None None None
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Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares -- Buying Class A Shares,"
below.
(2) See "How to Buy Shares -- Buying Class B Shares," and "How to Buy
Shares -- Buying Class C Shares" below, for more information on the
contingent deferred sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal
Funds wire, but not for redemptions paid by check or ACH transfer through
AccountLink, or, with respect to Class A shares only for which check
writing privileges are used (see "How to Sell Shares").
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, OppenheimerFunds,
Inc. (which is referred to in this Prospectus as the "Manager"). The
rates of the Manager's fees are set forth in "How the Fund is Managed,"
below. The Fund has other regular expenses for services, such as transfer
agent fees, custodial fees paid to the bank that holds the Fund's
portfolio securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of Additional
Information.
The numbers in the chart below are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year ended
September 30, 1995. These amounts are shown as a percentage of the
average net assets of each class of the Fund's shares for that year. The
"12b-1 Distribution Plan Fees" for Class A shares are the Service Plan
Fees (which can be up to a maximum of 0.25% of average annual net assets
of that class), and for Class B and Class C shares, are the Service Plan
Fees (which can be up to a maximum of 0.25%) and the asset-based sales
charges of 0.75%. These plans are described in greater detail in "How to
Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the chart, depending on a number of
factors, including the actual amount of the Fund's assets represented by
each class of shares. Class C shares were not publicly sold before
February 1, 1995. Therefore, the Annual Fund Operating Expenses shown for
Class C shares are based on amounts that would have been payable in that
period assuming that Class C shares were outstanding during the entire
fiscal year.
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------
Management Fees 0.45% 0.45% 0.45%
- --------------------------------------------------------------------
12b-1 Plan Fees 0.25% 1.00% 1.00%
- --------------------------------------------------------------------
Other Expenses 0.21% 0.26% 0.35%
- --------------------------------------------------------------------
Total Fund Operating 0.91% 1.71% 1.80%
Expenses
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses table above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
- -----------------------------------------------------------------
Class A Shares $44 $63 $84 $143
- -----------------------------------------------------------------
Class B Shares $57 $74 $103 $161
- -----------------------------------------------------------------
Class C Shares $28 $57 $97 $212
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $44 $63 $84 $143
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Class B Shares $17 $54 $93 $161
- -----------------------------------------------------------------
Class C Shares $18 $57 $97 $212
*The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge on Class
B and Class C shares, long-term Class B and Class C shareholders could pay
the economic equivalent of more than the maximum front-end sales charge
allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares into Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How to Buy
Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What is The Fund's Investment Objective? The Fund's investment
objective is to seek high current return and safety of principal.
- What Does the Fund Invest In? The Fund anticipates that under
normal circumstances, it will maintain an average effective portfolio
duration (measured on a dollar-weighted basis) of not more than three
years. Portfolio "duration" is explained in "Investment Policies and
Strategies." The Fund invests only in obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities (these are
called "U.S. Government Securities"), and repurchase agreements on such
securities. The Fund may also use hedging instruments approved by its
Board of Trustees to try to manage its investment risks. The Fund's
investments in U.S. Government Securities may include collateralized
mortgage obligations ("CMO's"). The Fund may also invest in "stripped"
CMO's or mortgage-backed securities. These investments are more fully
explained in "Investment Objectives and Policies," starting on page 7.
- Who Manages the Fund? The Fund's investment advisor is
OppenheimerFunds, Inc., which (including a subsidiary) advises investment
company portfolios having over $ 40 billion in assets at December 31,
1995. The Manager is paid an advisory fee by the Fund, based on its net
assets. The Fund's portfolio manager, who is primarily responsible for
the selection of the Fund's securities, is David A. Rosenberg. The Fund's
Board of Trustees, elected by shareholders, oversees the investment
advisor and the portfolio manager. Please refer to "How the Fund is
Managed," starting on page ____ for more information about the Manager and
its fees.
- How Risky is the Fund? Although U.S. Government Securities involve
little credit risk, their values will fluctuate (until maturity) depending
on prevailing interest rates. The magnitude of these fluctuations will
often be greater for longer-term debt securities than shorter-term
securities. While the Manager tries to reduce that risk by seeking to
limit the average portfolio duration, by diversifying investments, by
carefully researching securities before they are purchased for the
portfolio and in some cases by using hedging techniques, there is no
guarantee of success in achieving the Fund's objective and your shares may
be worth more or less than their original cost when you redeem them.
Please refer to "Investment Objective and Policies" starting on page ___
for a more complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
beginning on page ___ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Each class of shares has the same investment
portfolio, but different expenses. Class A shares are offered with a
front-end sales charge, starting at 3.5% and reduced for larger purchases.
Class B and Class C shares are offered without front-end sales charges,
but may be subject to a contingent deferred sales charge if redeemed
within 5 years or 12 months, respectively, of purchase. There is also an
annual asset-based sales charge on Class B and Class C shares. Please
review "How To Buy Shares" starting on page ___ for more details,
including a discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer, or by writing a check against your current account (available for
Class A shares only). Please refer to "How To Sell Shares" on page 24.
The Fund also offers exchange privileges to other Oppenheimer funds,
described in "How to Exchange Shares" on pages ___ and ___.
- How Has the Fund Performed? The Fund measures its performance by
quoting a yield, dividend yield, average annual total return and
cumulative total return, which measure historical performance. Those
returns can be compared to the yields and total returns (over similar
periods) of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's performance can
also be compared to U.S. Government bond indices, which we have done on
pages ___ and ___. Please remember that past performance does not
guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense ratios
and other data based on the Fund's average net assets. The information
for the fiscal years ended September 30, 1990, through September 30, 1995,
has been audited by Deloitte & Touche LLP, the Fund's independent
auditors, whose report on the Fund's financial statements for the fiscal
year ended September 30, 1995 is included in the Statement of Additional
Information. The information in the table for the fiscal periods prior
to October 1, 1989 (except for total return) was audited by the Fund's
previous independent auditors. Class C shares were only offered during
a portion of the fiscal year ended September 30, 1995, commencing on
February 1, 1995.
<TABLE>
<CAPTION>
CLASS A
------
YEAR ENDED SEPTEMBER 30,
1995 1994 1993 1992 1991 1990(4) 1989
<S> <C> <C> <C> <C> <C> <C>
<C>
==========================================================
==========================================================
============
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.40 $11.04 $10.97 $10.75 $10.18 $10.17 $10.14
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .79 .72 .73 .81 .87 .89 .90
Net realized and unrealized gain (loss)
on investments and options written .01 (.64) .07 .22 .57 .01 .03
-------- -------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations .80 .08 .80 1.03 1.44 .90 .93
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.76) (.71) (.73) (.81) (.87) (.89) (.90)
Dividends in excess of net investment income -- --(6) -- -- -- -- --
Tax return of capital distribution -- (.01) -- -- -- -- --
Distributions from net realized gain on
investments and options written -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total dividends and distributions to shareholders (.76) (.72) (.73) (.81) (.87) (.89) (.90)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.44 $10.40 $11.04 $10.97 $10.75 $10.18 $10.17
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
==========================================================
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(7) 8.03% .74% 7.61% 9.88% 14.69% 9.15%
9.65%
==========================================================
==========================================================
============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $346,015 $227,858 $178,944 $158,068 $167,974 $213,391 $237,819
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $274,313 $190,829 $161,318 $160,830 $192,404 $218,528 $243,863
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end
of period (in thousands) 33,136 21,906 16,206 14,416 15,624 20,964 23,395
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.64% 6.74% 6.70% 7.44% 8.27% 8.77% 8.96%
Expenses .91% .99% 1.02% .97% .98% .90% .93%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 261% 226% 74% 154% 112% 60% 61%
<FN>
1. For the period from February 1, 1995 (inception of offering) to September 30, 1995.
2. For the period from May 3, 1993 (inception of offering) to September 30, 1993.
3. For the period from March 10, 1986 (commencement of operations) to September 30, 1986.
4. On April 7, 1990, Oppenheimer Management Corporation became the investment advisor to the Fund.
5. Net investment income would have been $.84 and $.52 absent the voluntary reimbursement or waiver
of expenses, resulting in an expense ratio of 1.00% and 1.07% for 1987 and 1986, respectively.
6. Less than $.001 per share.
</FN>
</TABLE>
--------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------------------- --------------------------------- ------
YEAR
ENDED
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
SEPT. 30,
1988 1987 1986(3) 1995 1994 1993(2) 1995(1)
<S> <C> <C> <C> <C> <C> <C>
<C>
==========================================================
==========================================================
============
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 9.72 $10.51 $10.56 $10.41 $11.06 $10.96 $10.32
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .89 .86(5) .57(5) .71 .62 .23 .45
Net realized and unrealized gain (loss)
on investments and options written .42 (.74) (.05) .01 (.64) .10 .10
-------- -------- -------- -------- ------- ------ --------
Total income (loss) from investment
operations 1.31 .12 .52 .72 (.02) .33 .55
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.89) (.86) (.57) (.69) (.62) (.23) (.44)
Dividends in excess of net investment income -- -- -- -- --(6) -- --
Tax return of capital distribution -- -- -- -- (.01) -- --
Distributions from net realized gain on
investments and options written -- (.05) -- -- -- -- --
-------- -------- -------- -------- ------- ------ --------
Total dividends and distributions to shareholders (.89) (.91) (.57) (.69) (.63) (.23) (.44)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.14 $ 9.72 $10.51 $10.44 $10.41 $11.06 $10.43
-------- -------- -------- -------- ------- ------ --------
-------- -------- -------- -------- ------- ------ --------
==========================================================
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(7) 13.86% .95% 4.97% 7.18% (.17)% 3.02%
5.47%
==========================================================
==========================================================
============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $251,794 $287,181 $127,797 $121,178 $38,877 $5,077 $14,569
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $267,557 $242,181 $105,123 $72,131 $15,801 $2,561 $6,112
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end
of period (in thousands) 24,834 29,560 12,162 11,607 3,734 459 1,397
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.75% 8.22% 7.93%(8) 6.80% 5.91% 4.81%(8)
6.51%(8)
Expenses .96% .56%(5) .08%(5)(8) 1.71% 1.79% 1.87%(8) 1.80%(8)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 78% 73% 471% 261% 226% 74% 261%
<FN>
7. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
8. Annualized.
9. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1995 were $1,205,339,188 and $991,409,240, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks high current return and safety of principal.
Investment Policies and Strategies. As a matter of fundamental policy the
Fund seeks its objective by investing only in obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities
("U.S. Government Securities"), repurchase agreements on such securities,
and hedging instruments approved by its Board of Trustees.
U.S. Government Securities include the following types of securities:
- U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which
have maturities generally greater than ten years when issued). The
payment of interest and repayment of principal at the maturity of U.S.
Treasury obligations are backed by the full faith and credit of the United
States. That means that the taxing power of the U.S. government is
pledged to the payment of interest and principal on those securities.
- Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. Debt securities issued or guaranteed by U.S.
Government agencies or instrumentalities have different levels of credit
protection. Some are supported by (a) the full faith and credit of the
U.S. Government, such as Government National Mortgage Association ("Ginnie
Mae") modified pass-through certificates (b) the right of the issuer to
borrow an amount, limited to a specific line of credit, from the U.S.
Government, such as bonds issued by Federal National Mortgage Association
("Fannie Mae") (c) the discretionary authority of the U.S. Government to
purchase the obligations of the agency or instrumentality or (d) the
credit of the instrumentality, such as obligations of Federal Home Loan
Mortgage Corporation ("Freddie Mac"). Securities of U.S. Government
agencies and instrumentalities that are supported by the discretionary
authority of the U.S. Government to purchase such securities which the
Fund may purchase under (c) above include: Federal Land Banks, Farmers
Home Administration, Central Bank for Cooperatives, and Federal
Intermediate Credit Banks, Freddie Mac and Fannie Mae.
- Mortgage-Backed Securities. The Fund will invest in Ginnie Mae
certificates only of the "fully-modified pass-through" type. These are
guaranteed as to timely payment of principal and interest by the full
faith and credit of the United States Government. Ginnie Mae certificates
are debt securities that represent an interest in a pool of mortgages that
are insured by the Federal Housing Administration or the Farmers Home
Administration, or are guaranteed by the Veterans Administration. The
Fund may also invest in other mortgage-backed securities that are issued
or guaranteed by agencies or instrumentalities of the U.S. Government,
such as Freddie Mac and Fannie Mae.
The Statement of Additional Information contains additional
information on U.S. Government securities. The effective maturity of a
mortgage-backed security may be shortened by unscheduled or early payment
of principal and interest on the underlying mortgages, which may affect
the effective yield of these securities. If principal is returned, it may
be invested in instruments having a higher or lower yield than the prepaid
instruments, depending on then-current market conditions. These
securities therefore may not be completely effective as a means of
"locking in" attractive long-term interest rates. They may also have less
potential for appreciation during periods of declining interest rates than
conventional bonds with comparable stated maturities. If the Fund buys
mortgage-backed securities at a premium, prepayments of principal and
foreclosures of mortgages may result in some loss of the Fund's principal
investment to the extent of the premium paid.
Maturity differs from effective duration, which is a volatility
measure. Please refer to "Investment Policies and Strategies" on page 10
for an explanation of duration.
- Collateralized Mortgage Obligations. The Fund may invest in
collateralized mortgage obligations ("CMOs") that are issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, or that are
collateralized by a portfolio of mortgages or mortgage-related securities
guaranteed by such an agency or instrumentality. Payment of the interest
and principal generated by the pool of mortgages is passed through to the
holders as the payments are received by the issuer of the CMO.
CMOs may be issued in a variety of classes or series ("tranches")
that have different maturities. The principal value of certain CMO
tranches may be more volatile than other types of mortgage-related
securities because of the possibility that the principal value of the CMO
may be prepaid earlier than the maturity of the CMO as a result of
prepayments of the underlying mortgage loans by the borrowers.
The Fund may invest in "stripped" mortgage-backed securities, CMOs
or other securities issued by agencies or instrumentalities of the U.S.
Government. Stripped mortgage-backed securities usually have two classes.
The classes receive different proportions of the interest and principal
distributions on the pool of mortgage assets that act as collateral for
the security. In certain cases, one class will receive all of the
interest payments (and is known as an "I/O"), while the other class will
receive all of the principal value on maturity (and is known as a "P/O").
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the
underlying mortgages. Principal prepayments increase that sensitivity.
Stripped securities that pay "interest-only" are therefore subject to
greater price volatility when interest rates change. They have the
additional risk that if the underlying mortgages are prepaid, the Fund
will lose the anticipated cash flow from the interest on the prepaid
mortgages. That risk is increased when general interest rates fall, and
in times of rapidly falling interest rates, the Fund might receive back
less than its investment.
The value of "principal-only" securities generally increases as
interest rates decline and prepayment rates rise. The price of these
securities is typically more volatile than that of coupon-bearing bonds
of the same maturity.
Stripped securities are generally purchased and sold by institutional
investors through investment banking firms. At present, established
trading markets have not yet developed for these securities. Therefore,
some stripped securities may be deemed "illiquid." The amount of illiquid
stripped securities the Fund can hold will be subject to the Fund's
fundamental investment policy limiting investments in illiquid securities
to 5% of the Fund's assets, described below.
The value of mortgage-backed securities may be affected by changes
in the market's perception of the creditworthiness of the entity issuing
or guaranteeing them or by changes in government regulations and tax
policies, as well as by interest rate risks, described below. Because the
yields on U.S. Government Securities are generally lower than on corporate
debt securities, the Fund may attempt to increase the income it can earn
from U.S. Government Securities by writing covered call options against
them, when market conditions are appropriate. Writing covered call
options is explained below, under "Other Investment Techniques and
Strategies."
The Fund may enter into "forward roll" transactions with banks or
other buyers that provide for future delivery of mortgage-backed
securities in which the Fund may invest. The Fund would be required to
identify cash, U.S. Government securities or other high-grade debt
securities to its custodian bank in an amount equal to its purchase
payment obligation under the roll.
- What Does the "Duration" of the Fund's Portfolio Mean? The Fund
anticipates that under normal market conditions, it will maintain an
average effective portfolio duration of not more than three years. The
Fund measures its portfolio duration on a "dollar-weighted" basis.
"Effective portfolio duration" refers to the expected percentage change
in the value of a bond resulting from a change in general interest rates
(measured by each 1% change in the rates on U.S. Treasury securities).
For example, if a bond has an effective duration of three years, a 1%
increase in general interest rates would be expected to cause the bond to
decline about 3%. It is a measure of portfolio volatility, and is one of
the basic tools used by the Manager in selecting securities for the Fund's
portfolio.
However, the calculation of a bond's duration (or the duration of the
entire portfolio of bonds, in the case of the Fund) cannot be relied on
as an exact prediction of future volatility. Duration is calculated by
using a number of variables and assumptions based on the historical
performance of similar bonds, and duration can be affected by unexpected
economic changes or other events affecting a security. For example, in
the case of CMOs, duration calculations are based on historical rates of
prepayments of underlying mortgages, and if these mortgages are prepaid
more rapidly than expected, the calculation of duration for a particular
CMO may not be correct.
Because unanticipated events may change the effective duration of
securities after the Fund buys them, there can be no assurance that the
Fund will achieve its targeted effective duration at all times. Even
though the Fund intends that its dollar-weighted average effective
portfolio duration will generally not exceed three years, the Fund may
invest in individual debt obligations of any maturity. "Investment
Objective and Policies" in the Statement of Additional Information
contains more information on the Fund's calculation of effective portfolio
duration.
- Interest Rate Risks. Although U.S. Government Securities involve
little credit risk, their market values will fluctuate until they mature,
depending on prevailing interest rates. When prevailing interest rates
go up, the market value of already issued debt securities tends to go
down. When interest rates go down, the market value of already issued
debt securities tends to go up. The magnitude of those fluctuations
generally will be greater when the average maturity of the Fund's
portfolio securities is longer. Because of this factor, the Fund's share
value and yield are not guaranteed and will fluctuate, and there can be
no assurance that the Fund's objective of seeking high current income and
conservation of principal will be achieved.
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, described above, as well as investment
policies it follows to try to achieve its objective. Additionally, the
Fund uses certain investment techniques and strategies in carrying out
those investment policies. The Fund's investment policies and practices
are not "fundamental" unless this Prospectus or the Statement of
Additional Information says that a particular policy is "fundamental." The
Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's Board
of Trustees may change non-fundamental policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus.
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." While short-term trading increases
portfolio turnover, the Fund incurs little or no brokerage costs for U.S.
Government Securities. The Fund may sell U.S. Government Securities
without regard to the length of time the Fund has held them. The Manager
may take advantage of short-term differentials in yields when short-term
trading is consistent with the objective of seeking high current return
and safety of principal.
High portfolio turnover may affect the ability of the Fund to qualify
as a "regulated investment company" under the Internal Revenue Code to
enable the Fund to obtain tax deductions for dividends and capital gains
distributions paid to shareholders. The Fund qualified in its fiscal year
ended September 30, 1995 intends to do so in the future, although it
reserves the right not to qualify.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below, which involve
certain risks. The Statement of Additional Information contains more
detailed information about these practices, including limitations on their
use that may help to reduce some of the risks.
- Loans of Portfolio Securities. To attempt to increase its income
or raise cash for liquidity purposes, the Fund may lend its portfolio
securities, other than repurchase transactions, to brokers, dealers and
other financial institutions. The Fund must receive collateral for a
loan. These loans are limited to not more than 25% of the Fund's total
assets and are subject to other conditions described in the Statement of
Additional Information. The value of the securities loaned is not
expected to exceed 5% of the Fund's total assets in the coming year. See
"Loans of Portfolio Securities" in the Statement of Additional Information
on securities loans.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There may be a risk of loss to the Fund
if the value of the security declines prior to the settlement date. As
a matter of fundamental policy, the Fund will not enter into when-issued
or delayed delivery transactions unless the acceptance and delivery of the
security to the Fund is mandatory, occurs within 120 days of the trade
date, and is settled in cash on the settlement date.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date. As
a matter of fundamental policy, the Fund will not enter into repurchase
transactions that will cause more than 25% of the Fund's net assets to be
subject to repurchase agreements having a maturity of seven days or less,
or that will cause more than 5% of the Fund's net assets to be subject to
repurchase agreements having a maturity beyond seven days. Also as a
matter of fundamental policy, the Fund will not enter into repurchase
agreements unless ownership and control of the securities subject to the
agreement are transferred to the Fund. Repurchase agreements must be
fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Fund may experience costs in disposing of
the collateral and may experience losses if there is any delay in doing
so.
- Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements under which the Fund sells securities and agrees to
repurchase them at an agreed upon time and at an agreed upon price. The
difference between the amount the Fund receives for the securities and the
amount it pays on repurchase is deemed to be a payment of interest.
- Illiquid and Restricted Securities. Under the policies established
by the Fund's Board of Trustees, the Manager determines the liquidity of
certain of the Fund's investments. Investments may be illiquid because
of the absence of an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual restriction on its resale or which
cannot be sold publicly until it is registered under the Securities Act
of 1933. As a fundamental policy, the Fund will not invest more than 5%
of its total assets in illiquid or restricted securities.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, and options on
futures, or enter into interest rate swap agreements. These are all
referred to as "hedging instruments." The Fund does not use hedging
instruments for speculative purposes, and has limits on the use of them,
described below. The hedging instruments the Fund may use are described
below and in greater detail in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
The Fund may buy and sell options and futures for a number of
purposes. It may do so to try to manage its exposure to the possibility
that the prices of its portfolio securities may decline, or to establish
a position in the securities market as a temporary substitute for
purchasing individual securities. It may do so to try to manage its
exposure to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options and
writing put options, tend to increase the Fund's exposure to the
securities market as a temporary substitute for purchasing securities.
Writing put options or covered call options may also provide income to the
Fund for liquidity purposes or raise cash for the Fund to distribute to
shareholders. Because the yields on U.S. Government Securities are
generally lower than on corporate debt securities, the Fund may attempt
to increase the income it can earn from U.S. Government Securities by
writing covered call options against them, when market conditions are
appropriate.
- Futures. The Fund may buy and sell futures contracts that relate
to interest rates (these are referred to as Interest Rate Futures).
Interest Rate Futures are described in "Hedging" in the Statement of
Additional Information.
- Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls). Calls the Fund buys or sells
must be listed on a securities or commodities exchange, or quoted on the
Automated Quotation System of the National Association of Securities
Dealers, Inc. (NASDAQ), or traded in the over-the-counter market. A call
or put option may not be purchased if the value of all of the Fund's put
and call options would exceed 5% of the Fund's total assets.
The Fund may buy calls only on securities or Interest Rate Futures,
or to terminate its obligation on a call the Fund previously wrote. The
Fund may write (that is, sell) covered call options.
When the Fund writes a call, it receives cash (called a premium).
The call gives the buyer the ability to buy the investment on which the
call was written from the Fund at the call price during the period in
which the call may be exercised. If the value of the investment does not
rise above the call price, it is likely that the call will lapse without
being exercised, while the Fund keeps the cash premium (and the
investment). After the Fund writes a call, not more than 25% of the
Fund's total assets may be subject to calls. Each call the Fund writes
must be "covered" while it is outstanding. That means the Fund must own
the investment on which the call was written or it must own other
securities that are acceptable for the escrow arrangements required for
calls. The Fund may write calls on Futures contracts it owns, but these
calls must be covered by securities or other liquid assets the Fund owns
and segregates to enable it to satisfy its obligations if the call is
exercised.
The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a seller
of a put on that investment. The Fund can buy only those puts that relate
to securities that the Fund owns, or Interest Rate Futures. The Fund can
buy a put on an Interest Rate Future whether or not the Fund owns the
particular Future in its portfolio. The Fund may write puts on securities
or Interest Rate Futures in an amount up to 50% of its total assets only
if such puts are covered by segregated liquid assets. In writing puts,
there is a risk that the Fund may be required to buy the underlying
security at a disadvantageous price.
- Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive or their obligation to pay
interest on a security. For example, they may swap a right to receive
floating rate payments for fixed rate payments. The Fund enters into
swaps only on securities it owns. The Fund may not enter into swaps with
respect to more than 25% of its total assets. Also, the Fund will
segregate liquid assets (such as cash or U.S. Government securities) to
cover any amounts it could owe under swaps that exceed the amounts it is
entitled to receive, and it will adjust that amount daily, as needed.
Income from interest rate swaps may be taxable.
- Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on an
investment that has increased in value, the Fund will be required to sell
the investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call price. In
writing puts, there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price. Interest rate swaps are
subject to credit risks (if the other party fails to meet its obligations)
and also to interest rate risks. The Fund could be obligated to pay more
under its swap agreements than it receives under them, as a result of
interest rate changes. These risks are described in greater detail in the
Statement of Additional Information.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." The Fund may use some types
of derivatives for hedging purposes and may invest in others because they
offer the potential for increased income and principal value. In general,
a "derivative investment" is a specially-designed investment whose
performance is linked to the performance of another investment or
security, such as an option, future or index. In the broadest sense,
derivative investments include exchange-traded options and futures
contracts (please refer to "Hedging," above). CMO's, interest rate swaps,
and "interest-only" and "principal-only" securities may also be considered
derivative investments.
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of the
instrument. There is also the risk that the underlying investment or
security might not perform the way the Manager expected it to perform.
The performance of derivative investments may also be influenced by
interest rate changes in the U.S. and abroad. All of these risks can mean
that the Fund will realize less income than expected from its investments,
or that it can lose part of the value of its investments, which will
affect the Fund's share price. Certain derivative investments held by the
Fund may trade in the over-the-counter markets and may be illiquid. If
that is the case, the Fund's investment in them will be limited as
discussed in the following paragraph.
Other Investment Restrictions. The Fund has other investment restrictions
which are "fundamental" policies. Under these fundamental policies, the
Fund cannot do any of the following:
- The Fund cannot borrow money, except from banks for temporary
purposes in amounts not in excess of 5% of the value of its assets. No
assets of the Fund may be pledged, mortgaged or hypothecated other than
to secure a borrowing, and then in amounts not exceeding 7.5% of the
Fund's total assets. Borrowings may not be made for leverage, but only
for liquidity purposes to satisfy redemption requests when liquidation of
portfolio securities is considered inconvenient or disadvantageous.
However, the Fund may enter into reverse repurchase agreements and when-
issued and delayed delivery transactions. The prohibition against
pledging, mortgaging or hypothecating assets does not bar the Fund from
escrow arrangements for options trading or collateral or margin
arrangements in connection with hedging instruments approved by the Fund's
Board of Trustees.
- The Fund cannot enter into a repurchase transaction that will cause
more than 25% of the Fund's total assets to be subject to such agreements.
- The Fund cannot make loans, except that the Fund may purchase or
hold debt obligations and enter into repurchase transactions and may lend
its portfolio securities in amounts not exceeding 25% of the total assets
of the Fund. Such loans must be collateralized by cash or U.S. Government
Securities in amounts equal at all times to at least 100% of the value of
the securities loaned, including accrued interest.
- The Fund cannot purchase restricted or illiquid securities
(including repurchase agreements of more than seven days' duration and
other securities that are not readily marketable) if more than 5% of the
Fund's total assets would be invested in such securities.
- The Fund cannot purchase any securities (other than U.S. Government
Securities) that would cause more than 5% of the Fund's total assets to
be invested in securities of a single issuer, or purchase more than 10%
of the outstanding voting securities of an issuer.
- The Fund cannot deviate from its other fundamental policies
described in "Investment Objective and Policies" and "Other Investment
Techniques and Strategies" in the Statement of Additional Information.
All of the percentage restrictions described above and elsewhere in
this Prospectus apply only at the time the Fund purchases a security, and
the Fund need not dispose of a security merely because the Fund's assets
have changed or the security has increased in value relative to the size
of the Fund. There are other fundamental policies discussed in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1986 as a
Massachusetts business trust. The Fund is an open-end diversified
management investment company with an unlimited number of authorized
shares of beneficial interest. Organized as a series fund, the Fund
presently has only one series.
The Fund is governed by a Board of Trustees, which is responsible
under Massachusetts law for protecting the interests of shareholders. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and officers of the Fund and provides more
information about them. Although the Fund is not required by law to hold
annual meetings, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right to call a meeting to
remove a Trustee or to take other action described in the Fund's
Declaration of Trust.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class C. All classes invest in the same investment portfolio.
Each class has its own dividends and distributions, and pays certain
expenses which may be different for the different classes. Each class may
have a different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Shares of each class may have
separate voting rights on matters in which interests of one class are
different from interests of another class, and shares of a particular
class vote as a class on matters that affect that class alone. Shares are
freely transferrable. Please refer to "How the Fund is Managed" in the
Statement of Additional Information on voting of shares.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out
its duties, subject to the policies established by the Board of Trustees,
under an Investment Advisory Agreement which states the Manager's
responsibilities and its fees. The Agreement sets forth the fees paid by
the Fund to the Manager, and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager and its affiliates currently manages investment companies,
including other Oppenheimer funds, with assets of more than $40 billion
as of December 31, 1995, and with more than 2.8 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company.
- Portfolio Manager. The Portfolio Manager of the Fund (who is also
a Vice President of the Fund) is David A. Rosenberg. He is a Vice
President of the Manager and has been the personal principally responsible
for the day-to-day management of the Fund's portfolio since January, 1994.
Mr. Rosenberg also serves as a portfolio manager of other Oppenheimer
funds. Previously he was an officer and portfolio manager for Delaware
Investment Advisors and for one of its mutual funds.
- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.500% of the first $100 million of
the Fund's average annual net assets, 0.450% of the next $150 million,
0.425% of the next $250 million and 0.400% of net assets in excess of $500
million. The Fund's management fee for its fiscal year ended September
30, 1995, was 0.45% of average annual net assets for Class A, Class B and
Class C shares.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. Because the Fund
purchases most of its portfolio securities directly from the sellers and
not through brokers, it therefore incurs relatively little expenses for
brokerage. From time to time it may use brokers when buying portfolio
securities. When deciding which brokers to use, the Manager is permitted
by the investment advisory agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves as
investment adviser.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with OppenheimerFunds Distributor,
Inc., a subsidiary of the Manager that acts as the Fund's Distributor. The
Distributor also distributes the shares of the other Oppenheimer funds and
is sub-distributor for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder
servicing agent for the Fund on an "at-cost" basis. It also acts as the
shareholder servicing agent for the other Oppenheimer funds. Shareholders
should direct inquiries about their accounts, to the Transfer Agent at the
address and toll-free number shown below in this Prospectus or on the back
cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return" and "yield" to illustrate its performance. The performance of
each class of shares is shown separately, because the performance of each
class of shares will usually be different as a result of the different
kinds of expenses each class bears. These returns measure the performance
of a hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's account (which will vary if
dividends are received in cash, or shares are sold or purchased). The
Fund's performance data may help you see how well your investment has done
over time and to compare it to other funds or market indices, as we have
done below.
It is important to understand that the Fund's yields and total
returns represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns and
yields are calculated is contained in the Statement of Additional
Information, which also contains information about other ways to measure
and compare the Fund's performance. The Fund's investment performance will
vary over time, depending on market conditions, the composition of the
portfolio, expenses and which class of shares you purchase.
- Total Returns. There are different types of "total returns" used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.
When total returns are quoted for Class A shares, they include the
payment of the current maximum initial sales charge. When total returns
are shown for Class B shares, they include the effect of the contingent
deferred sales charge that applies to the period for which total return
is shown. When total returns are shown for a one-year period (or less)
for Class C shares, they include the effect of the contingent deferred
sales charge. Total returns may also be quoted at "net asset value,"
without including the effect of either the front-end or the appropriate
contingent deferred sales charge, as applicable, and those returns would
be reduced if sales charges were deducted.
- Yield. Each class of shares calculates its yield by dividing the
annualized net investment income per share on the portfolio during a 30-
day period by the maximum offering price on the last day of the period.
The yield of each class will differ because of the different expenses of
each class of shares. The yield data represents a hypothetical investment
return on the portfolio, and does not measure an investment return based
on dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a class derived from net investment income
during a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect the
deduction of the maximum initial sales charge, but may also be shown based
on the Fund's net asset value per share. Yields for Class B shares and
Class C shares do not reflect the deduction of the contingent deferred
sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended September 30, 1995,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's fiscal
year ended September 30, 1995, the U.S. dollar strengthened against major
overseas currencies, thereby making the U.S. bond market relatively more
attractive to foreign investors. As a result of low inflation
expectations and slower, more stable economic growth, greater demand for
bonds resulted in an overall increase in prices and a fall in yields. To
enhance income as yields declined, the Manager shifted the Fund's
investments away from short-term U.S. obligations into mortgage-backed
securities, which offered yield advantages. The Fund's investment
strategy and its practice of seeking to pay dividends on Class A shares
at a constant level (to the extent possible) did not have a material
effect on the Fund's net asset value per share.
- Comparing the Fund's Performance to the Market. The charts below
show the performance of hypothetical $10,000 investment in Class A, Class
B and Class C shares of the Fund held until September 30, 1995 in the case
of Class A shares, since March 10, 1986 (inception of Fund), in the case
of Class B shares, from the inception of the class on May 3, 1993 and in
the case of Class C shares, from the inception of the Class on February
1, 1995. In all cases all dividends and capital gains distributions were
reinvested in additional shares. The Fund had a different investment
adviser prior to April 7, 1990. The Fund's maximum initial sales charge
for Class A shares and contingent deferred sales charges for Class B
shares were reduced effective April 1, 1994, so that actual results for
prior periods would have been less. The graph reflects the deduction of
the 3.50% current maximum initial sales charge on Class A shares, the
maximum contingent deferred sales charge of 5% on Class B shares and the
1% contingent deferred sales charge on Class C shares during the first
year.
The graphs below compare the Fund's performance against the Lehman
Brothers U.S. Government Bond Index, a broad-based unmanaged index of U.S.
Treasury issues, publicly-issued debt of U.S. Government agencies and
quasi-public corporations and corporate debt guaranteed by the U.S.
Government. That index is widely used to measure the performance of the
U.S. Government securities market. The graphs below also compare the
Fund's performance against the Lehman Brothers 1 - 3 Year Government Bond
Index, an unmanaged sector index of U.S. Treasury issues, publicly-issued
debt of U.S. Government agencies and quasi-public corporations and
corporate debt guaranteed by the U.S. Government with maturities of one
to three years. This secondary index comparison is included to reflect
the adoption by the Fund, effective May 1, 1994, of the investment policy
that the Fund will, under normal circumstances, seek to maintain a dollar-
weighted average portfolio effective duration of not more than three
years.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the
data below shows the effect of taxes. Also, the Fund's performance
reflects the effect of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited
to the securities in any one index and the index data does not reflect any
assessment of the risk of the investments included in the index.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments In:
Oppenheimer Limited-Term Government Fund (Class A), Lehman Bros. U.S.
Government Bond Index and Lehman Bros. 1-3 Year Government Bond Index
(Graph)
Average Annual Total Returns of Class A Shares of the Fund at 9/30/951
1 Year 5 Year Life
4.25% 7.33% 7.85%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments In:
Oppenheimer Limited-Term Government Fund (Class B and Class C), Lehman
Bros. U.S. Government Bond Index and Lehman Bros. 1-3 Year Government Bond
Index
(Graph)
Average Annual Total Returns of Class B Shares of the Fund at 9/30/952
1 Year Life
3.18% 3.29%
Cumulative Total Return of Class C shares of the Fund at 09/30/953
Life
4.47%
1 The inception date of the Fund (Class A shares) was 3/10/86. The
average annual total returns and the ending account value for Class A
shares in the graph reflect reinvestment of all dividends and capital
gains distributions and are shown net of the current 3.50% maximum initial
sales charge.
2 Class B shares of the Fund were first publicly offered on 5/3/93. The
average annual total returns reflect reinvestment of all dividends and
capital gains distributions and are shown net of the applicable 4% and 2%
contingent deferred sales charges, respectively, for the one year period
and life of the class. The ending account value for Class B shares in the
graph is net of the applicable 2% contingent deferred sales charge.
3 Class C shares of the Fund were first publicly offered on 2/1/95. The
cumulative total return and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are
shown net of the 1% contingent deferred sales charge for the period.
Graphs are not drawn to same scale.
Past performance is not predictive of future performance.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase Class A
shares as part of an investment of at least $1 million ($500,000 for
OppenheimerFunds prototype 401(k) plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if you
sell any of those shares within 18 months of buying them, you may pay a
contingent deferred sales charge. The amount of that sales charge will
vary depending on the amount you invested. Sales charge rates are
described in "Buying Class A Shares," below.
- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within five years of
buying them, you will normally pay a contingent deferred sales charge that
varies depending on how long you owned your shares, as described in
"Buying Class B Shares," below.
- Class C Shares. If you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of
buying them, you will normally pay a contingent deferred sales charge of
1%, as discussed in "Buying Class C Shares," below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional shares,
you should re-evaluate those factors to see if you should consider another
class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, and considered the effect of
the asset-based sales charge on Class B and Class C expenses (which, like
all expenses, will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
your investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's actual
investment returns, and the operating expenses borne by each class of
shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment advice,
guidelines or recommendations, because each investor's financial
considerations are different. The discussion below of the factors to
consider in purchasing a particular class of shares assumes that you will
purchase only one class of shares and not a combination of shares of
different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses your choice will also depend on how much you invest. For
example, the reduced sales charges available for larger purchases of Class
A shares may, over time, offset the effect of paying an initial sales
charge on your investment (which reduces the amount of your investment
dollars used to buy shares for your account), compared to the effect over
time or higher class-based expenses on the shares of Class B or Class C
for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short term
investment horizon (that is, you plan to hold your shares for not more
than five years), you should probably consider purchasing Class A or Class
C shares rather Class B shares. Because of the effect of the Class B
contingent deferred sales charge if you redeem in less than seven years,
as well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term, Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward five years Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater economic impact on your account over
the longer term than the reduced front-end sales charge available for
larger purchases of Class A shares. For example, Class A might be more
advantageous than Class C (as well as Class B) for investments of more
than $100,000 expected to be held for 5 or 6 years (or more), Class A
shares may become more advantageous than class C (and B). If investing
$500,000 or more, Class A may be more advantageous as your investment
horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B or $1
million or more of Class C shares from a single investor.
- Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need access
to your money for six years or more, Class B shares may be an appropriate
consideration if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for Class A
shares and the reduced initial sales charge available for larger
investments in Class A shares under the Fund's Right of Accumulation.
Of course all of these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical investment
over time, using the assumed annual performance return stated above, and
you should analyze your options carefully.
- Are There Differences in Account Features That Matter To You?
Because some features (such as check writing) may not be available to
Class B or C shareholders, or other features (such as Automatic Withdrawal
Plans) may not be advisable (because of the effect of the contingent
deferred sales charge in non-retirement accounts) for Class B or Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy. For
example, share certificates are not available for Class B or Class C
shares and if you are considering using your shares as collateral for a
loan, this may be a factor to consider. Additionally, dividends payable
to Class B and Class C shareholders will be reduced by the additional
expenses borne by those classes that are not borne by Class A, such as the
Class B and Class C asset-based sales charges described below and in the
Statement of Additional Information.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares, may receive different compensation for selling one
class than for selling another class. It is important that investors
understand that the purpose of the Class B and Class C contingent deferred
sales charges and asset-based sales charges are the same as the purpose
of the front-end sales charge on sales of Class A shares: to reimburse the
Distributor for commissions it pays to dealers and financial institutions
for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments for as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial adviser,
to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member to transmit funds electronically to purchase shares, to have the
Transfer Agent send redemption proceeds, or to transmit dividends and
distributions.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to
"AccountLink," below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Prices Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your order
by the time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all references
to time in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange on a regular business
day and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor, in its sole discretion, may reject any purchase order for the
Fund's shares.
Special Sales Charge Arrangements for Certain Persons. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from,
sales charges or the special sales charge rates that apply to purchases
of shares of the Fund (including purchases by exchange) by a person who
was a shareholder of one of the Former Quest for Value Funds (as defined
in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, where purchases are not subject to an
initial sales charge, and the offering price may be net asset value. In
some cases, reduced sales charges may be available, as described below.
Out of the amount you invest, the Fund receives the net asset value to
invest for your account. The sales charge varies depending on the amount
of your purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. Different sales
charge rates and commissions applied to sales of Class A shares prior to
April 1, 1994. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission as
As Percentage ofAs Percentage ofPercentage of
Amount of Purchase Offering Price Amount InvestedOffering Price
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Less than $100,000 3.50% 3.63% 3.00%
- ---------------------------------------------------------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.00% 3.09% 2.50%
- --------------------------------------------------------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.50%
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- purchases aggregating $1 million or more, or
- purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more or (2) has, at the time of purchase,
100 or more eligible participants, or (3) certifies that it projects to
have annual plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those purchases
in an amount equal to the sum of 1.0% of the first $2.5 million, plus
0.50% of the next $2.5 million, plus 0.25% of purchases over $5 million.
That commission will be paid only on the amount of those purchases in
excess of $1 million ($500,000 for purchases by OppenheimerFunds 401(k)
prototype plans) that were not previously subject to a front-end sales
charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
The Class A contingent deferred sales charge will not exceed the aggregate
commissions the Distributor paid to your dealer on all Class A shares of
all Oppenheimer funds you purchased subject to the Class A contingent
deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate for current purchases of Class A shares. You can also include
Class A and Class B shares of Oppenheimer funds you previously purchased
subject to an initial or contingent deferred sales charge to reduce the
sales charge rate for current purchases of Class A shares, provided that
you still hold your investment in one of the Oppenheimer funds. The value
of those shares will be based on the greater of the amount you paid for
the shares or their current value (at offering price). The Oppenheimer
funds are listed in "Reduced Sales Charges" in the Statement of Additional
Information, or a list can be obtained from the Distributor. The reduced
sales charge will apply only to current purchases and must be requested
when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase Class
A shares or Class A and Class B shares of the Fund and other Oppenheimer
funds during a 13-month period, you can reduce the sales charge rate that
applies to your purchases of Class A shares. The total amount of your
intended purchases of both Class A and Class B shares will determine the
reduced sales charge rate for the Class A shares purchased during that
period. More information is contained in the Application and in "Reduced
Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an explanation
of this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing specifically
for the use of shares of the Fund in particular investment products made
available to their clients (those clients may be charged a transaction fee
by their dealer, broker or advisor for the purchase or sale of Fund
shares) or (2) to sell shares of defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administrative services.
- directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
- accounts for which Oppenheimer Capital is the investment adviser
(the Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial
owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of
the Class B and C TRAC-2000 program on November 24, 1995; or
- qualified retirement plans that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through DCXchange,
a sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by March 31,
1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or one of its
affiliates acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor;
- shares purchased and paid for with the proceeds of shares redeemed
in the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver; and
- purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived
if shares that would otherwise be subject to the contingent deferred sales
charge are redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans
or other employee benefit plans, including OppenheimerFunds prototype
401(k) plans (these are all referred to as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules
and Policies," below);
- if, at the time a purchase order is placed for Class A shares
that would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees in writing to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans
for any of the following cases or purposes: (1) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within five years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price. The Class B
contingent deferred sales charge is paid to the Distributor to compensate
it for providing distribution-related services to the Fund in connection
with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 5 years, and (3) shares held the longest during the
5-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Years Since Beginning of Contingent Deferred Sales Charge
Month in which On Redemptions in That Year
Purchase Order Was Accepted (As % of Amount Subject to Charge)
- ------------------------------------------------------------------
0-1 4.0%
- ------------------------------------------------------------------
1-2 3.0%
- ------------------------------------------------------------------
2-3 2.0%
- ------------------------------------------------------------------
3-4 2.0%
- ------------------------------------------------------------------
4-5 1.0%
- ------------------------------------------------------------------
5 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made. Different contingent deferred sales
charges applied to redemptions of Class B shares prior to April 1, 1994.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and
Class C Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of dividends
or capital gains distributions. The charge will be assessed on the lesser
of the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
- Distribution and Service Plans for Class B and Class C Shares. The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate the Distributor for distributing Class B and C shares
and servicing accounts. Under the Plans, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close
of each regular business day during the period. The asset-based sales
charge allows investors to buy Class B or C shares without a front-end
sales charge while allowing the Distributor to compensate dealers that
sell those shares.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The Distributor pays the 0.25% service fees to
dealers in advance for the first year after Class B or Class C shares have
been sold by the dealer and retains the service fee paid by the Fund in
that year. After the shares have been held for a year, the Distributor
pays the service fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 2.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale. The total amount paid by the Distributor to the dealer at
the time of sales of Class B shares is therefore 3.00% of the purchase
price. The Fund pays the asset-based sales charge to the Distributor for
its services rendered in distributing Class B shares. Those payments,
retained by the Distributor, are at a fixed rate that is not related to
the Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions, service
fees and other costs of distributing and selling Class B shares.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the
time of sale. The total amount paid by the Distributor to the dealer at
the time of sale of Class C shares is therefore 1.00% of the purchase
price. The Distributor retains the asset-based sales charge during the
first year Class C shares are outstanding to recoup the sales commissions
it has paid, the advances of service fee payments it has made, and its
financing costs and other expenses. The Distributor plans to pay the
asset-based sales charge as an ongoing commission to the dealer on Class
C shares that have been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may
be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plans for Class B and C shares. Therefore, those
expenses may be carried over and paid in future years. At September 30,
1995, thendoftheClassBandClassCPlanyearthe Distributor had incurred
unreimbursed expenses under the Class B Plan of $3,511,728 (equal to 2.9%
of the Fund's net assets represented by Class B shares on that date), and
unreimbursed expenses under the Class C Plan of $232,886 (equal to 1.6%
of the Fund's net assets represented by Class C shares on that date) which
have been carried over into the present Plan year. If either Plan is
terminated by the Fund, the Board of Directors may allow the Fund to
continue payments of the asset-based sales charge to the Distributor for
distributing shares before the Plan was terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to Class B
and Class C shares redeemed in certain circumstances as described below.
The reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares
in the following cases, if the Transfer Agent is notified that these
conditions apply to the redemption:
- distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments are
no more than 10% of the account value annually (measured from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by
the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant
is age 59-1/2 but only after the participant has separated from service,
if the distributions are made in substantially equal periodic payments
over the life (or life expectancy) of the participant or the joint lives
(or joint life and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must comply
with other requirements for such distributions under the Internal Revenue
Code and may not exceed 10% of the account value annually, measured from
the date the Transfer Agent receives the request);
- shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; and
- shares issued in plans of reorganization to which the Fund is
a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges should be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank
account information must be made by signature-guaranteed instructions to
the Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be
used on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other Oppenheimer funds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or
Class B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or other
Oppenheimer funds without paying a sales charge. This privilege applies
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. This privilege does not apply to
Class C shares. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing, or by using the Fund's
check writing privilege, or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described above.
If you have questions about any of these procedures, and especially if you
are redeeming shares in a special situation, such as due to the death of
the owner, or from a retirement plan, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive
a check
- The redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
account statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing as a fiduciary or on behalf of a corporation, partnership or
other business, or as a fiduciary you must also include your title in the
signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. You may not redeem
shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call
1-800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account statement. This service is not available within 30 days of
changing the address on an account.
- Telephone Redemptions Through AccountLink or Wire. There are no
dollar limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer to
your bank is initiated on the business day after the redemption. You do
not receive dividends on the proceeds of the shares you redeemed while
they are waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account if the bank is a member of the Federal Reserve
wire system. There is a $10 fee for each Federal Funds wire. To place
a wire redemption request, call the Transfer Agent at 1-800-852-8457. The
wire will normally be transmitted on the next bank business day after the
shares are redeemed. There is a possibility that the wire may be delayed
up to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of
shares that have been redeemed and are awaiting transmittal by wire. To
establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Check Writing. To be able to write checks against your Fund account, you
may request that privilege on your account Application or you can contact
the Transfer Agent for signature cards, which must be signed (with a
signature guarantee) by all owners of the account and returned to the
Transfer Agent so that checks can be sent to you to use. Shareholders with
joint accounts can elect in writing to have checks paid over the signature
of one owner.
- Checks can be written to the order of whomever you wish, but may
not be cashed at the Fund's bank or custodian.
- Check writing privileges are not available for accounts holding
Class B shares or Class C shares, or Class A shares that are subject to
a contingent deferred sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value. Remember: your shares fluctuate in value and you should
not write a check close to the total account value.
- You may not write a check that would require the Fund to redeem
shares that were purchased by check or Asset Builder Plan payments within
the prior 10 days.
- Don't use your checks if you changed your Fund account number.
Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence.
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege.
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day.
- You must meet the minimum purchase requirements for the fund you
purchase by exchange.
- Before exchanging into a fund, you should obtain and read its
prospectus.
Shares of a particular class may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of
shares, which are considered to be Class A shares for this purpose. In
some cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same names and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. That list can change
from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into up
to 7 days if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy
might require the disposition of securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any time.
- For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund,
which may result in a capital gain or loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange which is normally 4:00
P.M., but may be earlier on some days, on each day the Exchange is open
by dividing the value of the Fund's net assets attributable to a class by
the number of shares of that class that are outstanding. The Fund's Board
of Trustees has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely in the
Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will
be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not be
able to complete a telephone transaction and should consider placing your
order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. For accounts registered
in the name of a broker-dealer, payment will be forwarded within 3
business days. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for any reason other than the
market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed "in
kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell Shares"
in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or Employer Identification Number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How to Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income each regular business day and
pays those dividends to shareholders monthly. Normally, dividends are paid
on the last business day every month, but the Board of Trustees can change
that date. Distributions may be made monthly from any net short-term
capital gains the Fund realizes in selling securities. Dividends paid on
Class A shares generally are expected to be higher than for Class B and
Class C shares because expenses allocable to Class B and Class C shares
will generally be higher.
Commencing with the Fund's fiscal quarter beginning July 1, 1994, the
Fund adopted the practice, to the extent consistent with the amount of the
Fund's net investment income and other distributable income, of attempting
to pay dividends on Class A shares at a constant level, although the
amount of such dividends are subject to change from time to time depending
on market conditions, the composition of the Fund's portfolio and expenses
borne by the Fund or borne separately by that Class.
The practice of attempting to pay dividends on Class A shares at a
constant level requires the Manager, consistent with the Fund's investment
objective and investment restrictions, to monitor the Fund's portfolio and
select higher yielding securities when deemed appropriate to maintain
necessary net investment income levels. The Fund anticipates paying
dividends at the targeted dividend level from net investment income and
other distributable income without any impact on the Fund's net asset
value per share.
The Board of Trustees may change the Fund's targeted dividend level
at any time, without prior notice to shareholders. The Fund does not
otherwise have a fixed dividend rate and there can be no assurance as to
the payment of any dividends or the realization of any capital gains.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year, which is September 30th. Long-term capital gains
will be separately identified in the tax information the Fund sends you
after the end of the year. Short-term capital gains are treated as
dividends for tax purposes. There can be no assurance that the Fund will
pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions In The Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Capital Gains Only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to
your bank account on AccountLink.
- Receive All Distributions In Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions In Another Oppenheimer Fund Account.
You can reinvest all distributions in another Oppenheimer fund account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
Federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
- "Buying a Dividend". When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions. Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is
the difference between the price you paid for the shares and the price you
received when you sold them.
- Returns of Capital. In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A
non-taxable return of capital may reduce your tax basis in your Fund
shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for Class
A, Class B and Class C shares of the Fund described elsewhere in this
Prospectus are modified as described below for those shareholders of (i)
Quest for Value Fund, Inc., Quest for Value Growth and Income Fund, Quest
for Value Opportunity Fund, Quest for Value Small Capitalization Fund and
Quest for Value Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and
(ii) Quest for Value U.S. Government Income Fund, Quest for Value
Investment Quality Income Fund, Quest for Value Global Income Fund, Quest
for Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt
Fund and Quest for Value California Tax-Exempt Fund when those funds
merged into various Oppenheimer funds on November 24, 1995. The funds
listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund (i)
acquired by such shareholder pursuant to an exchange of shares of one of
the Oppenheimer funds that was one of the Former Quest for Value Funds or
(ii) received by such shareholder pursuant to the merger of any of the
Former Quest for Value Funds into an Oppenheimer fund on November 24,
1995.
Class A Sales Charges
- - Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- - Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for
Class A shares purchased by a "Qualified Retirement Plan" through a single
broker, dealer or financial institution, or by members of "Associations"
formed for any purpose other than the purchase of securities if that
Qualified Retirement Plan or that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
<PAGE>
<TABLE>
<CAPTION>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentageof
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations having
50 or more eligible employees or members, there is no initial sales charge
on purchases of Class A shares, but those shares are subject to the Class
A contingent deferred sales charge described on pages to of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above
in the Prospectus. In addition, purchases by 401(k) plans that are
Qualified Retirement Plans qualify for the waiver of the Class A initial
sales charge if they qualified to purchase shares of any of the Former
Quest For Value Funds by virtue of projected contributions or investments
of $1 millon or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations, or
as eligible employees in Qualified Retirement Plans also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Fund's Distributor.
- - Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of Former
Quest for Value Funds into those Oppenheimer funds, and which shares were
subject to a Class A contingent deferred sales charge prior to November
24, 1995 will be subject to a contingent deferred sales charge at the
following rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to 1.0% if
the redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent six
months. Class A shares of any of the Former Quest Fund for Value Funds
purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- - Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified Funds.
- - Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to redemptions
of Class A shares of the Fund purchased by the following investors who
were shareholders of any Former Quest for Value Fund:
- Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted
under that law.
- Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
- - Waivers for Redemptions of Shares Purchased Prior to March 6, 1995
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest for Value Fund or into which
such fund merged, if those shares were purchased prior to March 6, 1995:
in connection with (i) distributions to participants or beneficiaries of
plans qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457 of the
Code, and other employee benefit plans, and returns of excess
contributions made to each type of plan, (ii) withdrawals under an
automatic withdrawal plan holding only either Class B or C shares if the
annual withdrawal does not exceed 10% of the initial value of the account,
and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum value of such accounts.
- - Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into which
such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants
or beneficiaries from Individual Retirement Accounts under Section 408(a)
of the Internal Revenue Code or retirement plans under Section 401(a),
401(k), 403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from service
or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as evidenced by
a determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan (but
only for Class B or C shares) where the annual withdrawals do not exceed
10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in
the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, B or C shares
of the Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares in this
Fund or another Oppenheimer fund.
<PAGE>
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and that were transferred to an OppenheimerFunds
prototype 401(k) plan shall be eligible for an additional one-time payment
by the Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and (i) the shares held by those plans were exchanged
for Class A shares, or (ii) the plan assets were transferred to an
OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of the
plan assets transferred, but that payment may not exceed $5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Graphic material included in Prospectus of Oppenheimer Limited-Term
Government Fund: "Comparison of Total Return of Oppenheimer Limited-Term
Government Fund with Lehman Brothers U.S. Government Bond Index and Lehman
Brothers 1-3 Year Government Bond Index - Change in Value of a $10,000
Hypothetical Investment."
Linear graphs will be included in the Prospectus of Oppenheimer
Limited-Term Government Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in (i) Class A shares of the Fund from inception of the Fund (March 10,
1986) to fiscal year-end September 30, 1995, (ii) Class B shares of the
Fund during the period May 3, 1993 (inception date for Class B shares) to
September 30, 1995 and (iii) Class C shares of the Fund during the period
February 1, 1995 (inception date for Class C shares) to September 30,
1995, in each case comparing such values with the same investments over
the same time periods with the Lehman Brothers U.S. Government Bond Index
and the Lehman Brothers 1-3 Year Government Bond Index. Set forth below
are the relevant data points that will appear on the linear graphs.
Additional information with respect to the foregoing, including a
description of the Lehman Brothers U.S. Government Bond Index and the
Lehman Brothers 1-3 Year Government Bond Index, is set forth in the
Prospectus under "Comparing the Fund's Performance to the Market."
<TABLE>
<CAPTION>
Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr Govt.
Government: A Bond Index Bond Index
<S> <C> <C> <C>
03/10/86 $ 9,650 $10,000 $10,000
09/30/861 $10,140 $10,330 $10,463
09/30/87 $10,236 $10,266 $10,880
09/30/88 $11,655 $11,500 $11,833
09/30/89 $12,780 $12,780 $12,884
09/30/90 $13,950 $13,666 $14,085
09/30/91 $15,999 $15,778 $15,671
09/30/92 $17,579 $17,817 $17,226
09/30/93 $18,917 $19,791 $18,077
09/30/94 $19,057 $18,991 $18,284
09/30/95 $20,587 $21,568 $19,780
</TABLE>
<TABLE>
<CAPTION> Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr Govt.
Government: B Bond Index Bond Index
<S> <C> <C> <C>
05/03/932 $10,000 $10,000 $10,000
09/30/93 $10,282 $10,554 $10,213
09/30/94 $10,265 $10,128 $10,330
09/30/95 $10,811 $11,502 $11,175
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Lehman Bros. Lehman Bros.
Limited-Term U.S. Govt. 1-3 Yr Govt.
Government: C Bond Index Bond Index
<S> <C> <C> <C>
02/01/953 $10,000 $10,000 $10,000
09/30/95 $10,447 $11,110 $10,673
</TABLE>
________________________
1. For the period from 3/10/86 (commencement of operations) to 9/30/86.
2. The inception date for Class B shares is 5/3/93.
3. For the period from 2/1/95 (commencement of operations) to 9/30/95
<PAGE>
Oppenheimer Limited-Term Government Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, OppenheimerFunds, Inc.,
OppenheimerFunds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
PR855.0296.N *Printed on recycled paper
<PAGE>
Oppenheimer Limited-Term Government Fund
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated February 1, 1996.
This Statement of Additional Information of Oppenheimer Limited-Term
Government Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus
dated February 1, 1996. It should be read together with the Prospectus
which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217 or by
calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies 2
Other Investment Techniques and Strategies 4
Other Investment Restrictions 13
How the Fund is Managed 14
Organization and History 14
Trustees and Officers of the Fund 15
The Manager and Its Affiliates 18
Brokerage Policies of the Fund 20
Performance of the Fund 21
Distribution and Service Plans 25
About Your Account
How to Buy Shares 27
How to Sell Share 34
How to Exchange Shares 38
Dividends, Capital Gains and Taxes 40
Additional Information about the Fund 41
Financial Information About the Fund
Independent Auditors' Report 42
Financial Statements 43
Appendix: Industry Classifications A-1
<PAGE>
ABOUT THE FUND
Investment Objective And Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund may invest, as well as the strategies the Fund may use
to try to achieve its objective. Certain capitalized terms used in this
Statement of Additional Information have the same meaning as those terms
have in the Prospectus.
- U.S. Government Securities. The obligations of U.S. Government
agencies or instrumentalities in which the Fund may invest may or may not
be guaranteed or supported by the "full faith and credit" of the United
States. Some are backed by the right of the issuer to borrow from the
U.S. Treasury; others, by discretionary authority of the U.S. Government
to purchase the agencies' obligations; while others are supported only by
the credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the United
States, the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to assert a claim
against the United States in the event that the agency or instrumentality
does not meet its commitment. The Fund will invest in U.S. Government
Securities of such agencies and instrumentalities only when the Fund's
investment manager, Oppenheimer Management Corporation (the "Manager") is
satisfied that the credit risk with respect to such instrumentality is
minimal.
General changes in prevailing interest rates will affect the values
of the Fund's portfolio securities. The value will vary inversely to
changes in such rates. For example, if such rates go up after a security
is purchased, the value of the security will generally decline. A
decrease in interest rates may affect the maturity and yield of mortgage-
backed securities by increasing unscheduled prepayments of the underlying
mortgages. With its objective of seeking high current return and safety
of principal, the Fund may purchase or sell securities without regard to
the length of time the security has been held, to take advantage of short-
term differentials in yields. While short-term trading increases the
portfolio turnover, the execution cost for U.S. Government Securities is
substantially less than for equivalent dollar values of equity securities
(see "Brokerage Provisions of the Investment Advisory Agreement," below).
Under normal circumstances, the Fund anticipates that it will
maintain a dollar-weighted average portfolio effective duration of not
more than three years. Subject to that limitation, the Fund may invest
in individual debt obligations of any maturity or duration. The Manager
will in good faith determine the effective duration of debt obligations
purchased by the Fund and will consider various factors applicable to each
type of debt obligation, including those set forth below. Duration
incorporates a bond's yield, coupon interest payments, final maturity and
call features into one measure. For generic fixed-income securities,
duration is calculated as the average time of present-value-weighted cash
flows divided by a small adjustment factor, pursuant to a calculation
known as modified Macaulay duration. Thus, for any generic fixed-income
security with interest payments occurring prior to the payment of
principal, duration is also less than maturity. Also, all other factors
being equal, the lower the stated or coupon rate of interest of a fixed-
income security, the longer the duration of the security; conversely, the
higher the stated or coupon rate of interest of a fixed-income security,
the shorter the duration of the security.
Futures, options and options on futures have durations which, in
general, are closely related to the duration of the securities which
underlie them. Holding long futures or call option positions (backed by
segregated liquid assets) will lengthen the portfolio's duration. There
are some situations, however, where the standard modified Macaulay
duration calculation does not properly reflect the interest rate exposure
of a security. For example, the interest rate exposure is not properly
captured by modified Macaulay duration in the case of mortgage pass-though
securities. The stated final maturity of such securities is generally 30
years, but changes in prepayment rates are more critical in determining
the securities' price exposure to interest rates. Indeed, the modified
Macaulay calculation even falls short in calculating the price sensitivity
of callable bonds to interest rates. In these and other similar
situations, the Manager will use more sophisticated analytical techniques
that incorporate the economic life of a security as well as relevant
macroeconomic factors (e.g., mortgage prepayment rates) into the
determination of the Fund's effective duration.
The U.S. Government Securities in which the Fund may invest include
the following:
- GNMA Certificates. The Government National Mortgage Association
("GNMA") is a wholly-owned corporate instrumentality of the United States
within the U.S. Department of Housing and Urban Development. GNMA's
principal programs involve its guarantees of privately-issued securities
backed by pools of mortgages. GNMA Certificates are debt securities
representing an interest in one or a pool of mortgages that are insured
by the Federal Housing Administration ("FHA") or the Farmers Home
Administration ("FMHA") or guaranteed by the Veterans Administration
("VA").
The GNMA Certificates in which the Fund invests are of the "fully
modified pass-through" type, that is, they provide that the registered
holders of the Certificates will receive timely monthly payments of the
pro-rata share of the scheduled principal payments on the underlying
mortgages, whether or not those amounts are collected by the issuers.
Amounts paid include, on a pro rata basis, any prepayment of principal of
such mortgages and interest (net of servicing and other charges) on the
aggregate unpaid principal balance of such GNMA Certificates, whether or
not the interest on the underlying mortgages has been collected by the
issuers.
The GNMA Certificates purchased by the Fund are guaranteed as to
timely payment of principal and interest by GNMA. It is expected that
payments received by the issuers of GNMA Certificates on account of the
mortgages backing the Certificates will be sufficient to make the required
payments of principal of and interest on such GNMA Certificates, but if
such payments are insufficient for that purpose, the guaranty agreements
between the issuers of the Certificates and GNMA require the issuers to
make advances sufficient for such payments. If the issuers fail to make
such payments, GNMA will do so.
Under Federal law, the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid
under any guaranty issued by GNMA as to such mortgage pools. An opinion
of an Assistant Attorney General of the United States, dated December 9,
1969, states that such guaranties "constitute general obligations of the
United States backed by its full faith and credit." GNMA is empowered to
borrow from the United States Treasury to the extent necessary to make any
payments of principal and interest required under such guaranties.
GNMA Certificates are backed by the aggregate indebtedness secured
by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages
and, except to the extent of payments received by the issuers on account
of such mortgages, GNMA Certificates do not constitute a liability of, nor
evidence any recourse against, such issuers, but recourse is solely
against GNMA. Holders of GNMA Certificates (such as the Fund) have no
security interest in or lien on the underlying mortgages.
Monthly payments of principal will be made, and additional
prepayments of principal may be made, to the Fund with respect to the
mortgages underlying the GNMA Certificates held by the Fund. All of the
mortgages in the pools relating to the GNMA Certificates in the Fund are
subject to prepayment without any significant premium or penalty, at the
option of the mortgagors. While the mortgages on 1-to-4-family dwellings
underlying certain GNMA Certificates have a stated maturity of up to 30
years, it has been the experience of the mortgage industry that the
average life of comparable mortgages, as a result of prepayments,
refinancing and payments from foreclosures, is considerably less. Periods
of dropping interest rates may spur refinancing of existing mortgages,
accelerating the rate of prepayments. Prepayments on such mortgages
received by the Fund will be reinvested in additional GNMA Certificates
or other U.S. Government Securities. The yields on such additional
securities may not necessarily be the same as (and may be lower than) the
yields on the prepaid securities, which will affect the income the Fund
receives and pays to its shareholders.
- Federal Home Loan Mortgage Corporation ("FHLMC") Certificates.
FHLMC, a corporate instrumentality of the United States, issues FHLMC
Certificates representing interests in mortgage loans. FHLMC guarantees
to each registered holder of a FHLMC Certificate timely payment of the
amounts representing a holder's proportionate share in (i) interest
payments less servicing and guarantee fees, (ii) principal prepayments and
(iii) the ultimate collection of amounts representing such holder's
proportionate interest in principal payments on the mortgage loans in the
pool represented by such FHLMC Certificate, in each case whether or not
such amounts are actually received. The obligations of FHLMC under its
guarantees are obligations solely of FHLMC and are not backed by the full
faith and credit of the United States.
- Federal National Mortgage Association ("FNMA") Certificates. FNMA,
a federally-chartered and privately-owned corporation, issues FNMA
Certificates which are backed by a pool of mortgage loans. FNMA
guarantees to each registered holder of a FNMA Certificate that the holder
will receive amounts representing such holder's proportionate interest in
scheduled principal and interest payments, and any principal prepayments,
on the mortgage loans in the pool represented by such FNMA Certificate,
less servicing and guarantee fees, and such holder's proportionate
interest in the full principal amount of any foreclosed or other
liquidated mortgage loan, in each case whether or not such amounts are
actually received. The obligations of FNMA under its guarantees are
obligations solely of FNMA and are not backed by the full faith and credit
of the United States or any agency or instrumentality thereof other than
FNMA.
Other Investment Techniques And Strategies
- Repurchase Agreements. The Fund may acquire securities that are
subject to repurchase agreements, in order to generate income while
providing liquidity. In a repurchase transaction, the Fund acquires a
security from, and simultaneously resells it to, an approved vendor for
delivery on an agreed-upon future date. An "approved vendor" is a U.S.
commercial bank, the U.S. branch of a foreign bank or a broker-dealer
which has been designated a primary dealer in government securities, which
must meet the credit requirements set by the Fund's Board of Trustees from
time to time. These sale price exceeds the purchase price by an amount
that reflects an agreed-upon interest rate effective for the period during
which the repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to resale
typically will occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act of 1940
(the "Investment Company Act"), collateralized by the underlying security.
The Fund's repurchase agreements will require that at all times while the
repurchase agreement is in effect, the collateral's value must equal or
exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value. If the vendor of a
repurchase agreement fails to pay the agreed-upon resale price on the
delivery date, the Fund's risks in such event may include any costs of
disposing of the collateral, and any loss from any delay in foreclosing
on the collateral.
- Reverse Repurchase Agreements. The Fund will maintain, in a
segregated account with its Custodian, cash, Treasury bills or other U.S.
Government Securities having an aggregate value equal to the amount of
such commitment to repurchase, including accrued interest, until payment
is made. The Fund will use reverse repurchase agreements as a source of
funds on a short-term basis (and not for leverage). As a fundamental
policy, the Fund will not enter into reverse repurchase agreements in
amounts exceeding 25% of the total assets of the Fund. In determining
whether to enter into a reverse repurchase agreement with a bank or
broker-dealer, the Fund will take into account the creditworthiness of
such party. As a matter of fundamental policy, the Fund will not enter
into a reverse repurchase transaction unless the securities
collateralizing the transaction have a maturity date not later than the
settlement date for the transaction.
- Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities (other than in repurchase transactions) to brokers, dealers and
other financial institutions subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are subject
to change), the loan collateral must, on each business day, at least equal
the market value of the loaned securities and must consist of cash, bank
letters of credit, U.S. Government Securities, or other cash equivalents
in which the Fund is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the Fund
if the demand meets the terms of the letter. Such terms and the issuing
bank must be satisfactory to the Fund. In a portfolio securities lending
transaction, the Fund receives from the borrower an amount equal to the
interest paid or the dividends declared on the loaned securities during
the term of the loan as well as the interest on the collateral securities,
less any finders', administrative or other fees the Fund pays in
connection with the loan. The Fund may share the interest it receives on
the collateral securities with the borrower as long as it realizes at
least a minimum amount of interest required by the lending guidelines
established by its Board of Trustees. In connection with securities
lending, the Fund might experience risks of delay in receiving additional
collateral, or risks of delay in recovery of the securities, or loss of
rights in the collateral should the borrower fail financially. The Fund
will not lend its portfolio securities to any officer, trustee, employee
or affiliate of the Fund or its Manager. The terms of the Fund's loans
must meet certain tests under the Internal Revenue Code and permit the
Fund to reacquire loaned securities on five business days' notice or in
time to vote on any important matter.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities for
its portfolio or for delivery pursuant to options contracts it has entered
into, the Fund may dispose of a commitment prior to settlement. "When-
issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not
available for immediate delivery. When such transactions are negotiated,
the price (which is generally expressed in yield terms) is fixed at the
time the commitment is made, but delivery and payment for the securities
take place at a later date. The Fund does not intend to make such
purchases for speculative purposes. Such securities may bear interest at
a lower rate than longer-term securities. The Fund does not intend to make
such purchase for speculative purposes. The commitment to purchase a
security for which payment will be made on a future date may be deemed a
separate security and involve a risk of loss if the value of the security
declines prior to the settlement date. During the period between
commitment by the Fund and settlement (generally within two months but not
to exceed 120 days), no payment is made for the securities purchased by
the purchaser, and no interest accrues to the purchaser from the
transaction. Such securities are subject to market fluctuation; the value
at delivery may be less than the purchase price. The Fund will maintain
a segregated account with its Custodian, consisting of cash, U.S.
Government securities or other high grade debt obligations at least equal
to the value of purchase commitments until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure of the buyer or
seller to do so may result in the Fund losing the opportunity to obtain
a price and yield considered to be advantageous. At the time the Fund
makes a commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects the
value of the security purchased, or if a sale, the proceeds to be
received, in determining its net asset value. If the Fund chooses to (i)
dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against a
forward commitment, it may incur a gain or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and not
for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or delivering
the securities, although (as noted above), when-issued securities and
forward commitments may be sold prior to settlement date. In addition,
changes in interest rates before settlement in a direction other than that
expected by the Manager will affect the value of such securities and may
cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and prices.
For instance, in periods of rising interest rates and falling prices, the
Fund might sell securities in its portfolio on a forward commitment basis
to attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might sell
portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields.
- Hedging. As described in the Prospectus, the Fund may employ one
or more types of Hedging Instruments to manage its exposure to changing
interest rates and securities prices. The Fund's strategy of hedging with
Futures and options on Futures will be incidental to the Fund's activities
in the underlying cash market. Puts and covered calls may also be written
on U.S. Government Securities to attempt to increase the Fund's income.
For hedging purposes, the Fund may use Interest Rate Futures and call and
put options on debt securities and Interest Rate Futures (all of the
foregoing are referred to as "Hedging Instruments"). Hedging Instruments
may be used to attempt to do the following: (i) protect against possible
declines in the market value of the Fund's portfolio resulting from
downward trends in the debt securities markets (generally due to a rise
in interest rates), (ii) protect unrealized gains in the value of the
Fund's debt securities which have appreciated, (iii) facilitate selling
debt securities for investment reasons, (iv) establish a position in the
debt securities markets as a temporary substitute for purchasing
particular debt securities, or (v) reduce the risk of adverse currency
fluctuations. A call or put may be purchased only if, after such
purchase, the value of all call and put options held by the Fund would not
exceed 5% of the Fund's total assets. The Fund will not use Futures and
options on Futures for speculation. The Hedging Instruments the Fund may
use are described below.
The Fund may use hedging to attempt to protect against declines in
the market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons.
To do so the Fund may: (i) sell Interest Rate Futures, (ii) purchase puts
on such Futures or U.S. Government Securities, or (iii) write covered
calls on securities held by it or on Futures. When hedging to attempt to
protect against the possibility that portfolio securities are not fully
included in a rise in value of the debt securities market, the Fund may:
(i) purchase Futures, or (ii) purchase calls on such Futures or on U.S.
Government Securities. Covered calls and puts may also be written on debt
securities to attempt to increase the Fund's income.
The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's activities in the underlying cash market.
Additional Information about the Hedging Instruments the Fund may use is
provided below. At present, the Fund does not intend to enter into
Futures and options on Futures if, after any such purchase, the sum of
margin deposits on Futures and premiums paid on Futures options exceeds
5% of the value of the Fund's total assets. In the future, the Fund may
employ Hedging Instruments and strategies that are not presently
contemplated but which may be developed, to the extent such investment
methods are consistent with the Fund's investment objective, legally
permissible and adequately disclosed.
- Writing Covered Calls. The Fund may write (i.e. sell) call options
("calls") on U.S. Government Securities to enhance income through the
receipt of premiums from expired calls and any net profits from closing
purchase transactions, subject to the limitations stated in the
Prospectus. All such calls written by the Fund must be "covered" while
the call is outstanding (i.e. the Fund must own the securities subject to
the call or other securities acceptable for applicable escrow
requirements). Calls on Futures (discussed below) must be covered by
deliverable securities or by liquid assets segregated to satisfy the
Futures contract. When the Fund writes a call on a security, it receives
a premium and agrees to sell the callable investment to a purchaser of a
corresponding call on the same security during the call period (usually
not more than 9 months) at a fixed exercise price (which may differ from
the market price of the underlying security), regardless of market price
changes during the call period. The Fund has retained the risk of loss
should the price of the underlying security decline during the call
period, which may be offset to some extent by the premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call written was more or less than the price of the call subsequently
purchased. A profit may also be realized if the call expires unexercised,
because the Fund retains the underlying investment and the premium
received. Any such profits are considered short-term capital gains for
Federal income tax purposes, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the callable
investments until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or a deliverable bond, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar amount of liquid assets. The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice require
the Fund to deliver a futures contract; it would simply put the Fund in
a short futures position, which is permitted by the Fund's hedging
policies.
- Writing Put Options. The Fund may write put options on U.S.
Government securities or Interest Rate Futures but only if such puts are
covered by segregated liquid assets. The Fund will not write puts if, as
a result, more than 50% of the Fund's net assets would be required to be
segregated to cover such put obligations. In writing puts, there is the
risk that the Fund may be required to buy the underlying security at a
disadvantageous price. A put option on securities gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying
investment at the exercise price during the option period. Writing a put
covered by segregated liquid assets equal to the exercise price of the put
has the same economic effect to the Fund as writing a covered call. The
premium the Fund receives from writing a put option represents a profit,
as long as the price of the underlying investment remains above the
exercise price. However, the Fund has also assumed the obligation during
the option period to buy the underlying investment from the buyer of the
put at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the Fund
(as the writer of the put) realizes a gain in the amount of the premium
less transaction costs. If the put is exercised, the Fund must fulfill
its obligation to purchase the underlying investment at the exercise
price, which will usually exceed the market value of the investment at
that time. In that case, the Fund may incur a loss, equal to the sum of
the current market value of the underlying investment and the premium
received minus the sum of the exercise price and any transaction costs
incurred.
When writing put options on securities, to secure its obligation to
pay for the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of the put
option. The Fund therefore foregoes the opportunity of investing the
segregated assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be assigned an
exercise notice by the broker-dealer through whom such option was sold,
requiring the Fund to take delivery of the underlying security against
payment of the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned
an exercise notice at any time prior to the termination of its obligation
as the writer of the put. This obligation terminates upon expiration of
the put, or such earlier time at which the Fund effects a closing purchase
transaction by purchasing a put of the same series as that previously
sold. Once the Fund has been assigned an exercise notice, it is
thereafter not allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a closing
purchase transaction will permit the Fund to write another put option to
the extent that the exercise price thereof is secured by the deposited
assets, or to utilize the proceeds from the sale of such assets for other
investments by the Fund. The Fund will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or
more than the premium received from writing the option. As above for
writing covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax purposes, and
when distributed by the Fund, are taxable as ordinary income.
- Purchasing Calls and Puts. The Fund may purchase calls on U.S.
Government Securities or on Interest Rate Futures, in order to protect
against the possibility that the Fund's portfolio will not fully
participate in an anticipated rise in value of the long-term debt
securities market. The value of U.S. Government Securities underlying
calls purchased by the Fund will not exceed the value of the portion of
the Fund's portfolio invested in cash or cash equivalents (i.e. securities
with maturities of less than one year). When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium and,
except as to calls on indices or Futures, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. When the
Fund purchases a call on a Future, it pays a premium, but settlement is
in cash rather than by delivery of the underlying investment to the Fund.
In purchasing a call, the Fund benefits only if the call is sold at a
profit or if, during the call period, the market price of the underlying
investment is above the sum of the exercise price, transaction costs and
the premium paid, and the call is exercised. If the call is not exercised
or sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment.
The Fund may purchase put options ("puts") which relate to U.S.
Government Securities (whether or not it holds such securities in its
portfolio) or Futures. When the Fund purchases a put, it pays a premium
and, except as to puts on indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same investment
during the put period at a fixed exercise price. Buying a put on an
investment the Fund owns enables the Fund to protect itself during the put
period against a decline in the value of the underlying investment below
the exercise price by selling such underlying investment at the exercise
price to a seller of a corresponding put. If the market price of the
underlying investment is equal to or above the exercise price and as a
result the put is not exercised or resold, the put will become worthless
at its expiration date, and the Fund will lose its premium payment and the
right to sell the underlying investment. The put may, however, be sold
prior to expiration (whether or not at a profit.)
Buying a put on Interest Rate Futures or U.S. Government Securities
permits the Fund either to resell the put or buy the underlying investment
and sell it at the exercise price. The resale price of the put will vary
inversely with the price of the underlying investment. If the market
price of the underlying investment is above the exercise price and as a
result the put is not exercised, the put will become worthless on its
expiration date. In the event of a decline in the bond market, the Fund
could exercise or sell the put at a profit to attempt to offset some or
all of its loss on its portfolio securities. When the Fund purchases a
put on Interest Rate Futures or U.S. Government Securities not held by it,
the put protects the Fund to the extent that the prices of the underlying
Future or U.S. Government Security move in a similar pattern to the prices
of the U.S. Government Securities in the Fund's portfolio.
An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no assurance
that a liquid secondary market will exist for any particular option. The
Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise by the Fund of puts on securities will cause
the sale of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might cause the
Fund to sell the related investments for reasons which would not exist in
the absence of the put. The Fund may pay a brokerage commission each time
it buys a put or call, sells a call, or buys or sells an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those which would apply to direct purchases
or sales of such underlying investments. Premiums paid for options are
small in relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options could result in the Fund's net
asset value being more sensitive to changes in the value of the underlying
investments.
- Interest Rate Futures. The Fund may buy and sell Interest Rate
Futures. No price is paid or received upon the purchase or sale of an
Interest Rate Future. An Interest Rate Future obligates the seller to
deliver and the purchaser to take a specific type of debt security at a
specific future date for a fixed price. That obligation may be satisfied
by actual delivery of the debt security or by entering into an offsetting
contract.
Upon entering into a Futures transaction, the Fund will be required
to deposit an initial margin payment in cash or U.S. Treasury bills with
the futures commission merchant (the "futures broker"). The initial
margin will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however the futures broker can
gain access to that account only under specified conditions. As the
Future is marked to market to reflect changes in its market value,
subsequent margin payments, called variation margin, will be made to or
by the futures broker on a daily basis. Prior to expiration of the
Future, if the Fund elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional
cash is required to be paid by or released to the Fund, and any loss or
gain is realized for tax purposes. Although Interest Rate Futures by
their terms call for settlement by delivery or acquisition of debt
securities, in most cases the obligation is fulfilled by entering into an
offsetting position. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.
- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund may engage in interest rate
swaps only with respect to securities it holds, and not in excess of 25%
of its total assets.
The Fund will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master netting
agreement provides that all swaps done between the Fund and that
counterparty under that master agreement shall be regarded as parts of an
integral agreement. If on any date amounts are payable in the same
currency in respect of one or more swap transactions, the net amount
payable on that date in that currency shall be paid. In addition, the
master netting agreement may provide that if one party defaults generally
or on one swap, the counterparty may terminate the swaps with that party.
Under such agreements, if there is a default resulting in a loss to one
party, the measure of that party's damages is calculated by reference to
the average cost of a replacement swap with respect to each swap (i.e.,
the mark-to-market value at the time of the termination of each swap).
The gains and losses on all swaps are then netted, and the result is the
counterparty's gain or loss on termination. The termination of all swaps
and the netting of gains and losses on termination is generally referred
to as "aggregation".
- Additional Information About Hedging Instruments and Their Use.
The Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities covering a call on the expiration of the
option or upon the Fund entering into a closing purchase transaction. An
option position may be closed out only on a market which provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular
option.
When the Fund writes an over-the-counter ("OTC") option, it will
enter into an arrangement with a primary U.S. Government securities
dealer, which would establish a formula price at which the Fund would have
the absolute right to repurchase that OTC option. That formula price
would generally be based on a multiple of the premium received for the
option, plus the amount by which the option is exercisable below the
market price of the underlying security (that is, the extent to which the
option "is in-the-money"). When the Fund writes an OTC option, it will
treat as illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the mark-to-
market value of any OTC option held by it. The Securities and Exchange
Commission ("SEC") is evaluating whether OTC options should be considered
liquid securities, and the procedure described above could be affected by
the outcome of that evaluation.
- Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to its
use of futures and options thereon as established by the Commodities
Futures Trading Commission ("CFTC"). In particular, the Fund is excluded
from registration as a "commodity pool operator" if it complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Fund's assets that may be used for Futures margin and
related options premiums for a bona fide hedging position. However, under
the Rule the Fund must limit its aggregate initial futures margin and
related option premiums to no more than 5% of the Fund's net assets for
hedging strategies that are not considered bona fide hedging strategies
under the Rule.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more different exchanges through one
or more or brokers. Thus, the number of options which the Fund may write
or hold may be affected by options written or held by other entities,
including other investment companies having the same or an affiliated
investment adviser. Position limits also apply to Futures. An exchange
may order the liquidation of positions found to be in violation of those
limits and may impose certain other sanctions. Due to requirements under
the Investment Company Act, when the Fund purchases a Future, the Fund
will maintain, in a segregated account or accounts with its Custodian,
cash or readily-marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the securities
underlying such Future, less the margin deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. That qualification enables the Fund to "pass through" its
income and realized capital gains to shareholders without the Fund having
to pay tax on them. This avoids a "double tax" on that income and capital
gains, since shareholders will be taxed on the dividends and capital gains
they receive from the Fund. One of the tests for the Fund's qualification
is that less than 30% of its gross income (irrespective of losses) must
be derived from gains realized on the sale of securities held for less
than three months. To comply with that 30% cap, the Fund will limit the
extent to which it engages in the following activities, but will not be
precluded from them: (i) selling investments, including Futures, held for
less than three months, whether or not they were purchased on the exercise
of a call held by the Fund; (ii) purchasing calls or puts which expire in
less than three months; (iii) effecting closing transactions with respect
to calls or puts written or purchased less than three months previously;
(iv) exercising puts or calls held by the Fund for less than three months;
or (v) writing calls on investments held for less than three months.
- Risks Of Hedging With Options and Futures. In addition to the
risks with respect to hedging discussed in the Prospectus and above, there
is a risk in using short hedging by selling Futures to attempt to protect
against decline in value of the Fund's portfolio securities (due to an
increase in interest rates) that the prices of such Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's securities. The ordinary spreads between prices in the cash
and futures markets are subject to distortions due to differences in the
natures of those markets. First, all participants in the futures markets
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close out
futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the
liquidity of the futures markets depends on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
If the Fund uses Hedging Instruments to establish a position in the
U.S. Government Securities markets as a temporary substitute for the
purchase of individual U.S. Government Securities (long hedging) by buying
Interest Rate Futures and/or calls on such Futures or on U.S. Government
Securities, it is possible that the market may decline; if the Fund then
concludes not to invest in such securities at that time because of
concerns as to possible further market decline or for other reasons, the
Fund will realize a loss on the Hedging Instruments that is not offset by
a reduction in the price of the U.S. Government Securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the
Fund must follow that are also fundamental policies. Fundamental policies
and the Fund's investment objective, cannot be changed without the vote
of a "majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of (i) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (ii) more than 50% of the
outstanding shares.
Under these additional restrictions, the Fund can not:
(1) purchase or sell real estate, commodities or commodity contracts;
however, the Fund may use hedging instruments approved by its Board
whether or not such hedging instruments are considered commodities or
commodity contracts;
(2) invest in interests in oil, gas, or other mineral exploration or
development programs;
(3) purchase securities on margin or make short sales of securities;
however the Fund may make margin deposits in connection with its use of
hedging instruments approved by its Board;
(4) underwrite securities except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities held in its
portfolio;
(5) invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation or other
acquisition;
(6) enter into reverse repurchase agreements that will cause more
than 25% of the Fund's total assets to be subject to such agreements;
(7) make investments for the purpose of exercising control of
management;
(8) purchase or retain securities of any company if, to the knowledge
of the Fund, its officers and trustees and officers and directors of the
Manager who individually own more than 0.5% of the securities of such
company together own beneficially more than 5% of such securities;
(9) purchase or retain securities of issuers having a record of less
than three years' continuous operation (such period may include the
operation of predecessor companies or enterprises if the issuer came into
existence as a result of a merger, consolidation or reorganization, or the
purchase of substantially all of the assets of the predecessor companies
or enterprises);
(10) purchase or sell standby commitments; or
(11) invest more than 25% of its assets in a single industry (neither
the U.S. Government nor any of its agencies or instrumentalities are
considered an industry for the purposes of this restriction).
For purposes of the Fund's policy not to concentrate its assets,
described in the last restriction above, the Fund has adopted the industry
classifications set forth in the Appendix to this Statement of Additional
Information. This is not a fundamental policy.
The percentage restrictions described above and in the Prospectus are
applicable only at the time of investment and require no action by the
Fund as a result of subsequent changes in value of the investments or the
size of the Fund.
How the Fund is Managed
Organization and History. The Fund was established in 1986 as First Trust
Fund-U.S. Government Series and changed its name to Oppenheimer Government
Securities Fund on July 10, 1992, and on May 1, 1994 to Oppenheimer
Limited-Term Government Fund.
As a Massachusetts business trust, the Fund is not required to hold,
and does not plan to hold, regular annual meetings of shareholders. The
Fund will hold meetings when required to do so by the Investment Company
Act or other applicable law, or when a shareholder meeting is called by
the Trustees or upon proper request of the shareholders. Shareholders
have the right, upon the declaration in writing or vote of two-thirds of
the outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of at least 10% of its
outstanding shares. In addition, if the Trustees receive a request from
at least 10 shareholders (who have been shareholders for at least six
months) holding shares of the Fund valued at $25,000 or more or holding
at least 1% of the Fund's outstanding shares, whichever is less, stating
that they wish to communicate with other shareholders to request a meeting
to remove a Trustee, the Trustees will then either make the Fund's
shareholder list available to the applicants or mail their communication
to all other shareholders at the applicants' expense, or the Trustees may
take such other action as set forth under Section 16(c) of the Investment
Company Act.
Shares of the Fund represent an interest in the Fund proportionately
equal to the interest of each other share of the same class and entitle
the holder to one vote per share (and a fractional vote for a fractional
share) on matters submitted to their vote at shareholders' meetings.
Shareholders of the Fund vote together in the aggregate on certain matters
at shareholders' meetings, such as the election of Trustees and
ratification of appointment of auditors for the Trust. Shareholders of
a particular class vote separately on proposals which affect that class,
and shareholders of a class which is not affected by that matter are not
entitled to vote on the proposal. Shareholders of a class vote on certain
amendments to the Distribution and/or Service Plans if the amendments
affect that class.
The Trustees are authorized to create new series and classes of
series. The Trustees may
reclassify unissued shares of the Trust or its series or classes into
additional series or classes of shares. The Trustees may also divide or
combine the shares of a class into a greater or lesser number of shares
provided that the proportionate beneficial interest of a shareholder in
the Fund is not changed. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person or by
proxy.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Fund, and any
shareholder of the Fund, agrees under the Fund's Declaration of Trust to
look solely to the assets of the Fund for satisfaction of any claim or
demand which may arise out of any dealings with the Fund, and the Trustees
shall have no personal liability to any such person, to the extent
permitted by law.
Trustees And Officers Of The Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. All of the Trustees are also trustees, directors
or managing general partners of Oppenheimer Total Return Fund, Inc.,
Oppenheimer Equity Income Fund, Oppenheimer High Yield Fund, Oppenheimer
International Bond Fund, Oppenheimer Cash Reserves, Oppenheimer Tax-Exempt
Fund, The New York Tax-Exempt Income Fund, Inc., Oppenheimer Champion
Income Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer Strategic
Income Fund, Oppenheimer Integrity Funds, Oppenheimer Strategic Income &
Growth Fund, and Oppenheimer Variable Account Funds; as well as the
following "Centennial Funds": Daily Cash Accumulation Fund, Inc.,
Centennial Money Market Trust, Centennial Government Trust, Centennial New
York Tax Exempt Trust, Centennial Tax Exempt Trust, Centennial California
Tax Exempt Trust and Centennial America Fund, L.P. (all of the foregoing
funds are collectively referred to as the "Denver-based Oppenheimer
funds") except for Ms. Macaskill and Mr. Fossel, who are a Trustee,
Director or Managing General Partner of all the Denver-based Oppenheimer
funds except Oppenheimer Integrity Funds and Oppenheimer Strategic Income
Fund. Ms. Macaskill is President and Mr. Swain is Chairman of the Denver
Oppenheimer funds. As of January 12, 1996, the Trustees and officers of
the Fund as a group owned less than 1% of the Fund's outstanding Class A
shares, less than 1% of the Fund's outstanding Class B shares and less
than 1% of the Fund's outstanding Class C shares. The foregoing statement
does not reflect ownership of shares held of record by an employee benefit
plan for employees of the Manager (for which plan three of the Trustees
and officers listed below, Ms. Macaskill and Messrs. Fossel and Swain, are
trustees), other than the shares beneficially owned under that plan by the
officers of the Fund listed below.
Robert G. Avis, Trustee*; Age 64
One North Jefferson Avenue, St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G.
Edwards, Inc. (its parent holding company); Chairman of A.G.E. Asset
Management and A.G. Edwards Trust Company (its affiliated investment
adviser and trust company, respectively).
William A. Baker, Trustee; Age 81
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age 65
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems Co.; formerly
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, Trustee*; Age 53
Two World Trade Center, New York, New York 10048-0203
Chairman and a director of the Manager; Director of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company,
Shareholder Services, Inc. ("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent subsidiaries of the Manager;
formerly Chief Executive Officer of the Manager.
Raymond J. Kalinowski, Trustee; Age 66
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International Inc.; formerly Vice
Chairman and a director of A.G. Edwards, Inc., parent holding company
of A.G. Edwards & Sons, Inc. (a broker-dealer), of which he was a
Senior Vice President.
______________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
C. Howard Kast, Trustee; Age 74
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
Robert M. Kirchner, Trustee; 74
7500 East Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill, President and Trustee*; Age 47
President, CEO and a Director of he Manager; Chairman and a Director
of SSI; President and a Director of OAC, HarbourView Asset Management
Corporation ("HarbourView"), a subsidiary of the Manager, and
Oppenheimer Partnership Holdings, Inc., a holding company subsidiary
of the Manager; formerly Executive Vice President of the Manager.
Ned M. Steel, Trustee; age 80
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting
Nurse Corporation of Colorado; formerly Senior Vice President and a
director of Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman and Trustee; Age 62
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; formerly Chairman of the Board of SSI.
Andrew J. Donohue, Vice President; Age 45
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); an officer
of other Oppenheimer funds; President and a Director of Centennial
Asset Management Corporation, an investment adviser subsidiary of the
Manager ("Centennial"); formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor; formerly a
partner in Kraft & McManimon (a law firm), prior to which he was an
officer of First Investors Corporation (a broker-dealer) and First
Investors Management Company, Inc. (broker-dealer and investment
adviser); director and an officer of First Investors Family of Funds
and First Investors Life Insurance Company.
George C. Bowen, Vice President, Secretary and Treasurer; Age 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other Oppenheimer funds.
David Rosenberg, Vice President and Portfolio Manager; Age 37
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other Oppenheimer funds;
formerly an officer and portfolio manager for Delaware Investment
Advisors and for one of its mutual funds.
Robert G. Zack, Assistant Secretary; Age 47
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert Bishop, Assistant Treasurer; Age 37
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller for
the Manager, prior to which he was an Accountant for Yale &
Seffinger, P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; age 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, (and previously
a Senior Fund Accountant for State Street Bank & Trust Company.)
- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Ms. Macaskill and Mr. Swain, who are both officers and
Trustees, and Mr. Fossel) receive no salary or fee from the Fund. The
Trustees of the Fund (excluding Messrs. Fossel and Swain) received the
total amounts shown below (i) from the Fund, during its fiscal year ended
September 30, 1995 and (ii) from all 21 of the Denver-based Oppenheimer
funds (including the Fund) listed in the first paragraph of this section
(and from Oppenheimer Strategic Investment Grade Bond Fund and Strategic
Short-Term Income Fund which ceased operation following the acquisition
of their assets by certain other Oppenheimer funds), for services in the
positions shown:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from the Fund Oppenheimer funds1
<S> <C> <C>
Robert G. Avis $350.37 $53,000.00
Trustee
William A. Baker $484.27 $73,254.66
Audit and Review Committee
Chairman and Trustee
Charles Conrad, Jr. $425.13 $64,309.17
Audit and Review Committee
Member and Trustee
Raymond J. Kalinowski $429.70 $65,000.00
Derivative Investments Oversight
Committee Member and Trustee
C. Howard Kast $429.70 $65,000.00
Derivative Investments Oversight
Committee Member and Trustee
Robert M. Kirchner
Audit and Review Committee $451.46 $68,292.00
Member and Trustee
Ned M. Steel
Trustee $350.37 $53,000.00
</TABLE>
______________________
1For the 1995 calendar year.
Major Shareholders. As January 12, 1996, no person owned of record or was
known by the Fund to own beneficially 5% or more of the Fund's outstanding
Class A, Class B or Class C shares except Merrill, Lynch, Pierce, Fenner
& Smith, Inc., 4800 Deer Lake Drive, 3rd Floor, Jacksonville, Florida
32246-6484 who owned 277,836 Class C shares (representing 10.99% of the
then outstanding Class C shares).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corporation ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Mr. Jon S. Fossel and Mr.
James C. Swain) serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the Distribution Agreement are paid
by the Fund. The advisory agreement lists examples of expenses paid by
the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal, and audit
expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses,
including litigation. For the Fund's fiscal years ended September 30,
1993, 1994, and 1995 the management fees paid by the Fund to the Manager
were $781,718, $976,513 and $1,599,989, respectively.
Under the advisory agreement, the Manager has undertaken that if the
total expenses of the Fund in any fiscal year should exceed the most
stringent state regulatory requirements on expense limitations applicable
to the Fund, the Manager's compensation under the advisory agreement will
be reduced by the amount of such excess. For the purpose of such
calculation, there shall be excluded any expense borne directly or
indirectly by the Fund which is permitted to be excluded from the
computation of such limitation by such statute or state regulatory
authority. At present, that limitation is imposed by California, and
limits expenses (with specific exclusions) to 2.5% of the first $30
million of average net assets, 2% of the next $70 million of average net
assets and 1.5% of average net assets in excess of $100 million. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties,
or reckless disregard of its obligations and duties under the advisory
agreement, the Manager is not liable for any loss resulting from any good
faith errors or omissions in connection with any matters to which the
Agreement relates. The advisory agreement permits the Manager to act as
investment adviser to any other person, firm or corporation.
- The Distributor. Under its Distribution Agreement with the Fund,
the Distributor acts as the Fund's principal underwriter in the continuous
public offering of the Fund's Class A, Class B and Class C shares but is
not obligated to sell a specific number of shares. Expenses normally
attributable to sales (other than those paid under the Distribution and
Service Plans, but including advertising and the cost of printing and
mailing prospectuses other than those furnished to existing shareholders),
are borne by the Distributor. For the fiscal year ended September 30,
1993, 1994, and 1995, the aggregate amount of sales charges on sales of
the Fund's Class A shares were $289,261, $1,006,962 and $2,605,966,
respectively, of which $85,929, $310,375 and $681,961 was retained by the
Distributor and an affiliated broker-dealer during those respective years.
Contingent deferred sales charges collected by the Distributor on the
redemption of Class B shares for the period May 3, 1993 (the commencement
of the offering of those shares) through September 30, 1994 and for the
fiscal year ended September 30, 1995 totaled $368,866 and $170,089,
respectively. Contingent deferred sales charges collected by the
Distributor on the redemption of Class C shares for the period February
1, 1995 (inception of class) through September 30, 1995 totalled $6,307.
For additional information about distribution of the Fund's shares and the
expenses connected with such activities, please refer to "Distribution and
Service Plans," below.
- The Transfer Agent. OppenheimerFunds Services, the Fund's transfer
agent, is responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and
administrative functions.
Brokerage Policies Of The Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ such broker-dealers,
including "affiliated" brokers, as that term is defined in the Investment
Company Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding, but is expected to minimize the
commissions paid to the extent consistent with the interest and policies
of the Fund as established by its Board of Trustees.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged, if a good faith
determination is made by the Manager and the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Most
purchases made by the Fund are principal transactions at net prices, and
the Fund incurs little or no brokerage costs. Subject to the provisions
of the advisory agreement, the procedures and rules described above,
allocations of brokerage are generally made by the Manager's portfolio
traders based upon recommendations from the Manager's portfolio managers.
In certain instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the advisory
agreement and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Manager's executive
officers. Transactions in securities other than those for which an
exchange is the primary market are generally done with principals or
market makers. Brokerage commissions are paid primarily for effecting
transactions in listed securities or for certain fixed income agency
transactions in the secondary market and otherwise only if it appears
likely that a better price or execution can be obtained.
When the Fund engages in an option transaction, ordinarily the same
broker will be used for the purchase or sale of the option and any
transaction in the securities to which the option relates. When possible,
concurrent orders to purchase or sell the same security by more than one
of the accounts managed by the Manager and its affiliates are combined.
The transactions effected pursuant to such combined orders are averaged
as to price and allocated in accordance with the purchase or sale orders
actually placed for each account.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
trades to obtain research where the broker has represented to the Manager
that (i) the trade is not from the broker's own inventory, (ii) the trade
was executed by the broker on an agency basis at the stated commission,
and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
Performance of the Fund
Yield and Total Return Information. From time to time the "standardized
yield," "dividend yield," "average annual total return", "total return,"
and "total return at net asset value" of an investment in a class of the
Fund may be advertised. An explanation of how yields and total returns
are calculated for each class and the components of those calculations is
set forth below. The Fund's maximum sales charge rate on Class A shares
was higher prior to April 1, 1994, and actual investment performance would
be affected by that change.
The Fund's advertisement of its performance must, under applicable
rules of the Securities and Exchange Commission, include the average
annual total returns for each class of shares of the Fund for the 1, 5 and
10-year periods (or the life of the class, if less) as of the most
recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's performance
to the performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a basis
for comparison with other investments. An investment in the Fund is not
insured; its yields and total returns and share prices are not guaranteed
and normally will fluctuate on a daily basis. When redeemed, an
investor's shares may be worth more or less than their original cost.
Yields and total returns for any given past period are not a prediction
or representation by the Fund of future yields or rates of return on its
shares. The yields and total returns of Class A, Class B and Class C
shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to a
particular class.
- - Standardized Yields
- Yield. The Fund's "yield" (referred to as "standardized yield")
for a given 30-day period for a class of shares is calculated using the
following formula set forth in rules adopted by the Securities and
Exchange Commission that apply to all funds that quote yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class
outstanding during the 30-day period that were entitled to
receive dividends.
d = the maximum offering price per share of the class on the
last day of the period, using the current maximum sales
charge rate adjusted for undistributed net investment
income.
The standardized yield of a class of shares for a 30-day period may
differ from its yield for any other period. The SEC formula assumes that
the standardized yield for a 30-day period occurs at a constant rate for
a six-month period and is annualized at the end of the six-month period.
This standardized yield is not based on actual distributions paid by the
Fund to shareholders in the 30-day period, but is a hypothetical yield
based upon the net investment income from the Fund's portfolio investments
calculated for that period. The standardized yield may differ from the
"dividend yield" of that class, described below. Additionally, because
each class of shares is subject to different expenses, it is likely that
the standardized yields of the Fund's classes of shares will differ. For
the 30-day period ended September 30, 1995, the standardized yields for
the Fund's Class A, Class B and Class C shares were 6.13%, 5.53% and
5.52%, respectively.
- Dividend Yield and Distribution Return. From time to time the Fund
may quote a "dividend yield" or a "distribution return" for each class.
Dividend yield is based on the dividends paid on shares of a class from
dividends derived from net investment income during a stated period.
Distribution return includes dividends derived from net investment income
and from realized capital gains declared during a stated period. Under
those calculations, the dividends and/or distributions for that class
declared during a stated period of one year or less (for example, 30 days)
are added together, and the sum is divided by the maximum offering price
per share of that class) on the last day of the period. When the result
is annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
- ----------------------------------------------------
Max Offering Price of the Class (last day of period)
Divided by number of days (accrual period) x 365
The maximum offering price for Class A shares includes the current
maximum front-end sales charge. For Class B or Class C shares, the
maximum offering price is the net asset value per share, without
considering the effect of contingent deferred sales charges. From time
to time similar yield or distribution return calculations may also be made
using the Class A net asset value (instead of its respective maximum
offering price) at the end of the period.
The dividend yields on Class A shares for the 30-day period ended
September 30, 1995, were 6.93% and 7.18% when calculated at maximum
offering price and at net asset value, respectively. The dividend yield
on Class B shares for the 30-day period ended September 30, 1995, was
6.36% when calculated at net asset value. The dividend yield on Class C
shares for the 30-day period ended September 30, 1995 was 6.35%.
Distribution returns for the 30-day period ended September 30, 1995 are
the same as the above-quoted dividend yields. No portion of the Class A,
Class B or Class C dividends for the fiscal year ended September 30, 1995
were derived from realized capital gains.
- - Total Return Information
- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment according to the following
formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return, but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 3.50% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as discussed below). For Class B shares, the payment of the
current contingent deferred sales charge (4.0% for the first year, 3.0%
for the second year, 2.0% for the third and fourth years, 1.0% in the
fifth year and none thereafter) is applied to the investment result for
the time period shown (unless the total return is shown at net asset
value, as described below). For Class C shares, the 1.0% contingent
deferred sales charge is applied to the investment result for the one-year
period (or less). Total returns also assume that all dividends and
capital gains distributions during the period are reinvested to buy
additional shares at net asset value per share, and that the investment
is redeemed at the end of the period.
The "average annual total returns" on an investment in Class A shares
of the Fund for the one year and five year periods ended September 30,
1995 were 6.56% and 6.85%, respectively, and for the period from March 10,
1986 (inception of the Fund) to September 30, 1995, was 7.91%. The
cumulative "total return" on Class A shares for the period from March 10,
1986 through September 30, 1995 was 110.98%. For the fiscal year ended
September 30, 1995 and the period from May 3, 1993 (the date Class B
shares were first publicly offered) through September 30, 1995, the
average annual total returns on an investment in Class B shares of the
Fund were 5.52% and 3.87%, respectively. The cumulative total return on
an investment in Class B shares of the Fund for the period from May 3,
1993 through September 30, 1995 was 10.62%. The cumulative total return
on an investment in Class C shares of the Fund for the period February 1,
1995 through September 30, 1995 was 6.86%.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an "average annual total return at net asset value" or a
cumulative "total return at net asset value" for Class A, Class B or Class
C shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions.
The average annual total returns at net asset value on an investment
in Class A shares of the Fund for the one and five-year periods ended
September 30, 1995 and for the period from March 10, 1986 to September 30,
1995 were 10.43%, 7.62% and 8.30%, respectively. The average annual total
returns at net asset value on an investment in Class B shares of the Fund
for the fiscal year ended September 30, 1995 and for the period from May
3, 1993 to September 30, 1995 were 9.52% and 4.54%, respectively. The
cumulative "total returns at net asset value" on the Fund's Class A shares
for the period from March 10, 1986 to September 30, 1995, was 118.64%.
The cumulative total return at net asset value on the Fund's Class B
shares for the period from May 3, 1993 through September 30, 1995 was
12.53%. The cumulative total return at net asset value on the Fund's Class
C shares for the period from February 1, 1995 through September 30, 1995
was 7.86%. Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class C
shares. However, when comparing total return of an investment in Class
A, Class B or Class C shares of the Fund with that of other alternatives,
investors should understand that as the Fund invests in collateralized
mortgage obligations, its shares are subject to greater market risks than
shares of funds having more conservative investment policies and that the
Fund is designed for investors who are willing to accept a degree of risk
of loss in hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B or Class C shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent mutual fund
monitoring service. Lipper monitors the performance of regulated
investment companies, including the Fund, and ranks their performance for
various periods based on categories relating to investment objectives.
The performance of the Fund's classes are ranked against (i) all other
funds, excluding money market funds, (ii) all other short-term U.S.
Government funds, and (iii) all other U.S. Government funds in a specific
size category. The Lipper performance rankings are based on total returns
that include the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly, in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when available) in excess of 90-day U.S.
Treasury bill monthly returns after considering sales charges and
expenses. Risk reflects fund performance below 90-day U.S. Treasury bill
monthly returns. Risk and return are combined to produce star rankings
reflecting performance relative to the average fund in a fund's category.
Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is
"below average" (next 22.5%) and one star is "lowest" (bottom 10%).
Morningstar ranks the Fund's Class A, Class B and Class C shares of the
Fund in relation to other government bond/mortgage funds. Rankings are
subject to change.
The total return on an investment made in Class A, Class B or Class
C shares of the Fund may also be compared with the performance for the
same period of: (1) the Lehman Brothers U.S. Government Bond Index, an
unmanaged index including all U.S. Treasury issues, publicly- issued debt
of U.S. Government agencies and quasi-public corporations and U.S.
Government-guaranteed corporate debt that is widely regarded as a measure
of the performance of the U.S. Government bond market, (2) the Lehman
Brothers 1-3 Year Government Bond Index, an unmanaged sector index of U.S.
Treasury issues, publicly-issued debt of U.S. Government agencies and
quasi-public corporations and U.S. Government-guaranteed corporate debt
with maturities of one to three years, and (3) the Consumer Price Index,
which is generally considered to be a measure of inflation. The foregoing
bond indices include a factor for the reinvestment of interest but do not
reflect expenses or taxes. Other indices may be used from time to time.
The performance of the Fund's Class A, Class B and Class C shares may also
be compared in publications to (i) the performance of various market
indices or other investments for which reliable performance data is
available, and (ii) to averages, performance rankings or other benchmarks
prepared by recognized mutual fund statistical services.
From time to time the Fund may also include in its advertisements and
sales literature performance information about the Fund or rankings of the
Fund's performance cited in newspapers or periodicals, such as The New
York Times. These articles may include quotations of performance from
other sources, such as Lipper or Morningstar.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or the Transfer Agent), by independent third-parties, on
the investor services provided by them to shareholders of the Oppenheimer
funds, other than the performance rankings of the Oppenheimer funds
themselves. These ratings or rankings of shareholder/investor services
by third parties may compare the Oppenheimer funds services to those of
other mutual fund families selected by the rating or ranking services, and
may be based upon the opinions of the rating or ranking service itself,
using its own research or judgment, or based upon surveys of investors,
brokers, shareholders or others. in relation to other equity funds.
When comparing yield, total return and investment risk of an
investment in Class A, Class B or Class C shares of the Fund with other
investments, investors should understand that certain other investments
have different risk characteristics than an investment in shares of the
Fund. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while the
Fund's returns will fluctuate and its share values and returns are not
guaranteed. U.S. Treasury securities are guaranteed as to principal and
interest by the full faith and credit of the U.S. government.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A Shares and
Distribution and Service Plans for Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act, pursuant to which the Fund
will compensate the Distributor in connection with the distribution and/or
servicing of the shares of that class, as described in the Prospectus.
Each Plan has been approved by a vote of (i) the Board of Trustees of the
Fund, including a majority of the Independent Trustees, cast in person at
a meeting called for the purpose of voting on that Plan, and (ii) the
holders of a "majority" (as defined in the Investment Company Act) of the
shares of each class.
In addition, under the Plans, the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform at
no cost to the Fund. The Distributor and the Manager may, in their sole
discretion increase or decrease the amount of payments they make to
Recipients from their own resources.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as such continuance is specifically
approved at least annually by the Fund's Board of Trustees including its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any
time by the vote of a majority of the Independent Trustees or by the vote
of the holders of a "majority" (as defined in the Investment Company Act)
of the outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required to
obtain the approval of Class B as well as Class A shareholders for a
proposed amendment to the Class A Plan that would materially increase
payments under the Class A Plan. Such approval must be by a "majority"
of the Class A and Class B shares (as defined in the Investment Company
Act), voting separately by class. All material amendments must be
approved by the Board and the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly for its review, detailing the amount of all payments made
pursuant to each Plan, the purpose for which the payments were made and
the identity of each Recipient that received any such payment and the
purpose of the payments. Those reports, including the allocations on
which they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on any such selection or nomination is approved by a
majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fee at the maximum rate and set no minimum amount. Any unreimbursed
expenses incurred by the Distributor with respect to Class A shares for
any fiscal quarter by the Distributor may not be recovered under the Class
A Plan in subsequent fiscal quarters. Payments received by the
Distributor under the Plan for Class A shares will not be used to pay any
interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor.
For the fiscal year ended September 30, 1995, payments under the
Class A Plan totaled $659,243, all of which was paid by the
Distributor to Recipients, including $24,157 paid to an affiliate of the
Distributor.
The Class B and Class C Plans allow the service fee payments to be
paid by the Distributor to Recipients in advance for the first year Class
B and Class C shares are outstanding, and thereafter on a quarterly basis,
as described in the Prospectus. The advance payment is based on the net
asset value of the Class B and Class C shares sold. An exchange of shares
does not entitle the Recipient to an advance payment of the service fee.
In the event Class B or Class C shares are redeemed during the first year
such shares are outstanding, the Recipient will be obligated to repay a
pro rata portion of the advance of the service fee payment to the
Distributor.
Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fee, or to pay
Recipients the service fee on a quarterly basis, without payment in
advance, the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period may
be established from time to time under the Class B Plan and the Class C
Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. The Distributor
anticipates that it will take a number of years for it to recoup (from the
Fund's payments to the Distributor under the Class B or Class C Plan and
from contingent deferred sales charges collected on redeemed Class B or
Class C shares) the sales commissions paid to authorized brokers or
dealers. Payments under the Class B Plan during the fiscal year ended
September 30, 1995 totalled $720,839, of which the Distributor paid $4,892
to an affiliated broker-dealer and retained $673,962 as reimbursement for
Class B sales commissions and service fee advances, as well as financing
costs. Payments made under the Class C Plan for the period from February
1, 1995 through September 30, 1995 totalled $40,364 of which the
Distributor retained $39,445 as reimbursement for Class C sales
commissions and service fee advances, as well as financing costs.
Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B and Class C shares of the
Fund. The Class B and Class C Plans provide for the Distributor to be
compensated at a flat rate whether the Distributor's distribution expenses
are more or less than the amounts paid by the Fund during that period.
Such payments are made in recognition that the Distributor (i) pays sales
commissions to authorized brokers and dealers at the time of sale, (ii)
may finance such commissions and/or the advance of the service fee payment
to Recipients under those Plans or provide such financing from its own
resources, or from an affiliate, (iii) employs personnel to support
distribution of shares, and (iv) costs of sales literature, advertising
and prospectuses (other than those furnished to current shareholders) and
state "blue sky" registration fees and certain other distribution
expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive compensation
for selling Fund shares may receive different compensation with respect
to one class of shares than the other. The Distributor will not accept
any order for $500,000 or $1 million or more of Class B or Class C shares,
respectively, on behalf of a single investor (not including dealer "street
name" or omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on Class B and Class C
shares will be reduced by incremental expenses borne solely by that class,
including the asset-based sales charge to which Class B and Class C shares
are subject.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of Class B shares does not constitute a
taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Class
B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event for
the holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to any class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total net
assets, and then equally to each outstanding share within a given class.
Such general expenses include (i) management fees, (ii) legal, bookkeeping
and audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to unaffiliated Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution and/or
Service Plan fees, (ii) incremental transfer and shareholder servicing
agent fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange on each day the
Exchange is open by dividing the value of the Fund's net assets
attributable to that class by the number of shares of that class
outstanding. The Exchange normally closes at 4:00 P.M., New York time,
but may close earlier on some days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states that
it will close New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day; it may
also close on other days. Trading may occur in U.S. Government Securities
at times when the Exchange is closed (including weekends and holidays or
after 4:00 P.M., on a regular business day). Because the net asset values
of the Fund will not be calculated at such times, if securities held in
the Fund's portfolio are traded at such times, the net asset values per
share of Class A, Class B and Class C shares of the Fund may be
significantly affected on such days when shareholders do not have the
ability to purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale prices on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
actively traded on a foreign securities exchange are valued at the last
sales price available to the pricing service approved by the Fund's Board
of Trustees or to the Manager as reported by the principal exchange on
which the security is traded; (iii) unlisted foreign securities or listed
foreign securities not actively traded are valued as in (i) above, if
available, or at the mean between "bid" and "asked" prices obtained from
active market makers in the security on the basis of reasonable inquiry;
(iv) long-term debt securities having a remaining maturity in excess of
60 days are valued at the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the
basis of reasonable inquiry; (v) debt instruments having a maturity of
more than one year when issued, and non-money market type instruments
having a maturity of one year or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained from active market makers in the security
on the basis of reasonable inquiry; (vi) money market-type debt securities
having a maturity of less than one year when issued that having a
remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vii) securities
(including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures.
In the case of U.S. Government Securities and mortgage-backed
securities, when last sale information is not generally available, such
pricing procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity, and other
special factors involved. The Fund's Board of Trustees has authorized the
Manager to employ a pricing service to price U.S. Government Securities
for which last sale information is not generally available. The Trustees
will monitor the accuracy of such pricing services by comparing prices
used for portfolio evaluation to actual sales prices of selected
securities.
Calls, puts and Futures held by the Fund are valued at the last sale
prices on the principal exchanges on which they are traded, or on NASDAQ,
as applicable, or, if there are no sales that day, in accordance with (i)
above. When the Fund writes an option, an amount equal to the premium
received by the Fund is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent deferred credit is included in
the liability section. The deferred credit is "marked-to-market" to
reflect the current market value of the option. In determining the Fund's
gain on investments, if a call written by the Fund is exercised, the
proceeds are increased by the premium received. If a call or put written
by the Fund expires, the Fund has a gain in the amount of the premium; if
the Fund enters into a closing purchase transaction, it will have a gain
or loss depending on whether the premium was more or less than the cost
of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on shares
purchased by the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for such purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at
4:00 P.M., but may close earlier on certain days. If the Federal Funds
are received on a business day after the close of the Exchange, the shares
will be purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received by the
Fund three days after the transfers are initiated. The Distributor and
the Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor or
broker-dealer incurs little or no selling expenses. The term "immediate
family" refers to one's spouse, children, grandchildren, grandparents,
parents, parents-in-law, siblings, sons- and daughters-in-law, a sibling's
spouse and a spouse's siblings.
- The Oppenheimer funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
Distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Rochester Fund Municipals*
Rochester Fund Series - The Bond Fund For Growth*
Rochester Portfolio Series - Limited Term New York Municipal Fund*
the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
______________________
* Shares of the Fund are not presently exchangeable for shares of these
funds.
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a CDSC).
- Letters of Intent. A Letter of Intent (referred to as a "Letter")
is an investor's statement in writing to the Distributor of the intention
to purchase Class A shares of the Fund (and Class A and Class B shares of
other Oppenheimer funds) during a 13-month period (the "Letter of Intend
period"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to
count the Class A and Class B shares purchased under the Letter to obtain
the reduced sales charge rate on purchases of Class A shares of the Fund
(and other Oppenheimer funds) that applies under the Right of Accumulation
to current purchases of Class A shares. Each purchase of Class A shares
under the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual total purchases. If total eligible
purchases during the Letter of Intent period exceed the intended amount
and exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended purchase amount specified in the Letter shall be held in escrow
by the Transfer Agent. For example, if the intended purchase amount is
$50,000, the escrow shall be shares valued in the amount of $2,500
(computed at the public offering price adjusted for a $50,000 purchase).
Any dividends and capital gains distributions on the escrowed shares will
be credited to the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended amount specified in the Letter, the investor must remit to the
Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which would
have been paid if the total amount purchased had been made at a single
time. Such sales charge adjustment will apply to any shares redeemed
prior to the completion of the Letter. If such difference in sales
charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary
to realize such difference in sales charges. Full and fractional shares
remaining after such redemption will be released from escrow. If a
request is received to redeem escrowed shares prior to the payment of such
additional sales charge, the sales charge will be withheld from the
redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes
and appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a) Class
A shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge, (b) Class B shares acquired subject to
a contingent deferred sales charge, and (c) Class A shares or Class B
shares acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A initial
or contingent deferred sales charge or (ii) Class B shares of one of the
other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is requested,
as described in the section of the Prospectus entitled "How to Exchange
Shares," and the escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of Class A shares
of certain Oppenheimer funds, or a contingent deferred sales charge may
apply to shares purchased by Asset Builder payments. An application
should be obtained from the Transfer Agent, completed and returned, and
a prospectus of the selected fund(s) should be obtained from the
Distributor or your financial advisor before initiating Asset Builder
payments. The amount of the Asset Builder investment may be changed or
the automatic investments may be terminated at any time by writing to the
Transfer Agent. A reasonable period (approximately 15 days) is required
after the Transfer Agent's receipt of such instructions to implement them.
The Fund reserves the right to amend, suspend, or discontinue offering
such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Check Writing. When a check is presented to the Bank for
clearance, the Bank will ask the Fund to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the
amount of the check. This enables the shareholder to continue receiving
dividends on those shares until the check is presented to the Fund.
Checks may not be presented for payment at the offices of the Bank or the
Fund's Custodian. This limitation does not affect the use of checks for
the payment of bills or to obtain cash at other banks. The Fund reserves
the right to amend, suspend or discontinue offering check writing
privileges at any time without prior notice.
- Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if
the aggregate net asset value of those shares is less than $200 or such
lesser amount as the Board may fix. The Board of Trustees will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.
- Selling Shares by Wire. The wire of redemption proceeds may be
delayed if the Fund's Custodian bank is not open for business on a day
when the Fund would normally authorize the wire to be made, which is
usually the Fund's next regular business day following the redemption.
In those circumstances, the wire will not be transmitted until the next
bank business day on which the Fund is open for business. No dividends
will be paid on the proceeds of redeemed shares awaiting transfer by wire.
- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, if the Board
of Trustees of the Fund determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash, the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind" of
securities from the portfolio of the Fund, in lieu of cash, in conformity
with applicable rules of the Securities and Exchange Commission. The Fund
has elected to be governed by Rule 18f-1 under the Investment Company Act,
pursuant to which the Fund is obligated to redeem shares solely in cash
up to the lesser of $250,000 or 1% of the net assets of the Fund during
any 90-day period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in selling
the securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method the Fund uses to value
its portfolio securities described above under "Determination of Net Asset
Values Per Share" and such valuation will be made as of the time the
redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares
that you purchased subject to an initial sales charge, or (ii) Class B
shares on which you paid a contingent deferred sales charge when you
redeemed them, without sales charge. This privilege does not apply to
Class C shares. The reinvestment may be made without sales charge only
in Class A shares of the Fund or any of the other Oppenheimer funds into
which shares of the Fund are exchangeable as described below, at the net
asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for that
privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a capital
loss on the redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the
Internal Revenue Code, if the redemption proceeds of Fund shares on which
a sales charge was paid are reinvested in shares of the Fund or another
of the Oppenheimer funds within 90 days of payment of the sales charge,
the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the
loss or increase the gain recognized from the redemption. However, in
that case, the sales charge would be added to the basis of the shares
acquired by the reinvestment of the redemption proceeds. The Fund may
amend, suspend or cease offering this reinvestment privilege at any time
as to shares redeemed after the date of such amendment, suspension or
cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of transfer
to the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B and Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans
or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons maintaining a plan account
in their own name) in OppenheimerFunds-sponsored prototype pension or
profit-sharing or 401(k) plans may not directly redeem or exchange shares
held for their account under those plans. The employer or plan
administrator must sign the request. Distributions from pension and
profit sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P (available
from the Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless the
shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives the order
placed by the dealer or broker, except that if the Distributor receives
a repurchase order from a dealer or broker after the close of The New York
Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker
from its customer prior to the time the Exchange closes (normally, that
is 4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Ordinarily, for accounts redeemed
by a broker-dealer under this procedure, payment will be made within three
business days after the shares have been redeemed upon the Distributor's
receipt of the required redemption documents in proper form, with the
signature(s) of the registered owners guaranteed on the redemption
document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of the payment on the
date requested and reserves the right to amend, suspend or discontinue
offering such plans at any time without prior notice. Because of the
sales charge assessed on Class A share purchases, shareholders should not
make regular additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should not
establish withdrawal plans, because of the imposition of the Class B and
Class C contingent deferred sales charges on such withdrawals (except
where the Class B and Class C contingent deferred sales charge is waived
as described in the Prospectus under "Class B Contingent Deferred Sales
Charge" or in "Class C Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and thereafter shares acquired with
reinvested dividends and capital gains distributions will be redeemed
next, followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made under
withdrawal plans should not be considered as a yield or income on your
investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent and the Fund shall incur no liability
to the Planholder for any action taken or omitted by the Transfer Agent
and the Fund in good faith to administer the Plan. Certificates will not
be issued for shares of the Fund purchased for and held under the Plan,
but the Transfer Agent will credit all such shares to the account of the
Planholder on the records of the Fund. Any share certificates held by a
Planholder may be surrendered unendorsed to the Transfer Agent with the
Plan application so that the shares represented by the certificate may be
held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How to Exchange Shares. As stated in the Prospectus, shares of a
particular class of Oppenheimer funds having more than one class of shares
may be exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class without
a class designation are deemed "Class A" shares for this purpose. All of
the Oppenheimer funds offer Class A, B and C shares except Oppenheimer
Money Market Fund, Inc., Centennial Tax Exempt Trust, Centennial
Government Trust, Centennial New York Tax Exempt Trust, Centennial
California Tax Exempt Trust, Centennial America Fund, L.P. and Daily Cash
Accumulation Fund Inc., which only offer Class A shares and Oppenheimer
Main Street California Tax Exempt Fund which only offers Class A and Class
B shares (Class B and Class C shares of Oppenheimer Cash reserves are
generally available only by exchange from the same class of shares of
other Oppenheimer funds or through OppenheimerFunds sponsored 401 (k)
plans).
Class A shares of Oppenheimer funds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made with
the Distributor may be exchanged at net asset value for shares of any of
the Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of shares
of either class purchased subject to a contingent deferred sales charge.
However, shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 12 months
prior to that purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for that
privilege, the investor or the investor's dealer must notify the
Distributor of eligibility for this privilege at the time the shares of
Oppenheimer Money Market Fund, Inc. are purchased, and, if requested, must
supply proof of entitlement to this privilege. The Class C contingent
deferred sales charge is imposed on Class C shares acquired by exchange
if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B and Class C contingent deferred sales charge
will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, the shareholder must either have
an existing account in, or obtain acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
request from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held of
record at the time of the previous determination of net asset value, or
as otherwise described in "How to Buy Shares." Daily dividends on newly
purchased shares will not be declared or paid until such time as Federal
Funds (funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares. Normally,
purchase checks received from investors are converted to Federal Funds on
the next business day. Dividends will be declared on shares repurchased
by a dealer or broker for three business days following the trade date
(i.e., to and including the day prior to settlement of the repurchase).
If all shares in an account are redeemed, all dividends accrued on shares
of the same class in the account will be paid together with the redemption
proceeds.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A, Class B and
Class C shares" above. Dividends are calculated in the same manner, at the
same time and on the same day for shares of each class. However,
dividends on Class B and Class C shares are expected to be lower than
dividends on Class A shares as a result of the asset-based sales charges
on Class B and Class C shares, and will also differ in amount as a
consequence of any difference in net asset value between the classes.
If prior distributions must be re-characterized at the end of the
fiscal year as a result of the effect of the Fund's investment policies,
shareholders may have a non-taxable return of capital, which will be
identified in notices to shareholders. There is no fixed dividend rate
and there can be no assurance as to the payment of any dividends or the
realization of any capital gains.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified as
a regulated investment company in its last fiscal year and intends to
qualify in future years, but reserves the right not to qualify. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests in
a particular year. For example, if the Fund derives 30% or more of its
gross income from the sale of securities held less than three months, it
may fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it does not qualify, the Fund will be treated for
tax purposes as an ordinary corporation and will receive no tax deduction
for payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board and the Manager might determine in
a particular year that it would be in the best interest of shareholders
for the Fund not to make such distributions at the required levels and to
pay the excise tax on the undistributed amounts. That would reduce the
amount of income or capital gains available for distribution to
shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other Oppenheimer funds listed in "Reduced
Sales Charges" above, at net asset value without sales charge. To elect
this option, the shareholder must notify the Transfer Agent in writing and
either have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Transfer Agent to establish an account. The investment will be made at
net asset value per share in effect at the close of business on the
payable date of the dividend or distribution. Dividends and/or
distributions from certain of the Oppenheimer funds may be invested in
shares of this Fund on the same basis.
Additional Information About The Fund
The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities, collecting income on the portfolio securities
and handling the delivery of such securities to and from the Fund. The
Manager has represented to the Fund that the banking relationships between
the Manager and with the Custodian have been and will continue to be
unrelated to and unaffected by the relationship between the Fund and the
Custodian. It will be the practice of the Fund to deal with the
Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates. The Fund's cash
balances with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of Oppenheimer Limited-Term
Government Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Limited-Term
Government Fund as of September 30, 1995, the related statement of
operations for the year then ended, the statements of changes in net
assets for the years ended September 30, 1995 and 1994, and the financial
highlights for the period October 1, 1989 (commencement of operations) to
September 30, 1995. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights (except for total return)
for the period March 10, 1986 (commencement of operations) to September
30, 1989 were audited by other auditors whose report dated November 2,
1989, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at September 30, 1995 by correspondence
with the custodian and brokers; and where confirmations were not received
from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer
Limited-Term Government Fund at September 30, 1995, the results of its
operations, the changes in its net assets, and the financial highlights
for the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche LLP
--------------------------
Denver, Colorado
October 20, 1995
<PAGE>
---------------------------------------------
STATEMENT OF INVESTMENTS September 30, 1995
---------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
==========================================================
==========================================================
=============
MORTGAGE-BACKED OBLIGATIONS--82.0%
- ---------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--82.0%
- ---------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/ Federal Home Loan Mortgage Corp., Collateralized Mtg.
SPONSORED--63.2% Obligations, Gtd. Multiclass Mtg. Participation Certificates:
10%, 11/15/19 $10,289,372 $10,504,730
10%, 6/15/20 5,500,000 6,268,281
6.65%, 4/15/21 12,500,000 12,251,953
8.20%, 7/15/19 977,743 992,257
8.50%, 10/15/19 14,795,770 15,026,880
9%, 12/15/20 14,750,000 15,095,703
9.25%, 11/1/08 462,553 486,250
Series 1057, Cl. C, 8%, 3/15/21 2,216,732 2,212,565
Series 1092, Cl. K, 8.50%, 6/15/21 15,000,000 16,174,219
Series 1097, Cl. L, 8.60%, 2/15/06 3,000,000 3,127,500
Series F, 9.50%, 12/15/18 1,696,037 1,715,643
-------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg
Obligations, Series 1548, Cl. C, 7%, 4/15/21 3,000,000 2,926,860
-------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg
Participation Certificates:
10%, 8/1/21 2,550,264 2,775,804
10%, 8/1/21 1,505,552 1,638,700
11.50%, 6/1/20 3,050,245 3,475,373
11.75%, 1/1/16 1,062,899 1,210,045
11.75%, 4/1/19 3,262,082 3,718,775
13%, 8/1/15 5,410,185 6,409,380
8%, 4/1/25 14,380,651 14,713,132
Series 1455, Cl. J, 7.50%, 12/15/22 15,000,000 15,445,200
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16--5/1/19 14,762,607 16,538,467
11.75%, 9/1/03--11/1/15 902,324 1,003,701
12%, 8/1/16 3,919,913 4,517,700
13%, 12/1/15 4,743,524 5,616,629
7%, 10/15/25(1) 40,000,000 39,450,000
7%, 8/1/25 16,752,163 16,521,822
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
10.50%, 11/25/20 10,000,000 11,834,375
8.75%, 12/25/20 7,500,000 8,058,984
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Mtg. Pass-Through Certificates:
12%, 4/1/19 4,487,810 5,194,641
13%, 8/1/15 3,151,848 3,734,940
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg
Investment Conduit Pass-Through Certificates:
12.50%, 12/1/15 4,550,255 5,322,377
13%, 6/1/15 66,219 74,124
13%, 8/1/10 49,554 55,470
8%, 1/1/23 345,558 353,441
8%, 7/25/19 8,000,000 8,267,500
9%, 8/1/19 1,036,037 1,086,524
Series 1991-169, Cl. PK, 8%, 10/25/21 595,000 622,519
</TABLE>
6 Oppenheimer Limited-Term Government Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/ Federal National Mortgage Assn., Interest-Only Stripped
SPONSORED) Mtg.-Backed Securities:
(CONTINUED) Trust 222, Cl. 2, 11.703%, 6/25/23(2) $85,664,203 $ 26,348,435
Trust 240, Cl. 2, 14.005%, 9/25/23(2) 5,204,460 1,633,306
Trust 257, Cl. 2, 9.127%, 2/25/24(2) 12,956,526 4,114,710
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 148, Cl. G, Zero Coupon, 8/25/23(3) 8,891,258 4,640,126
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., STRIPS, Series G, Cl. 2, 11.50%, 3/25/09 2,953,705 3,277,691
-----------
304,436,732
- ---------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED Government National Mortgage Assn.:
- --18.8% 10.50%, 1/15/16--10/15/21 4,522,104 4,999,728
11%, 2/15/98--2/15/01 1,648,249 1,744,579
11.50%, 1/15/13--5/15/13 1,173,420 1,297,412
13%, 2/15/11--9/15/14 98,054 110,742
6.50%, 10/1/25(1) 70,000,000 71,028,125
7.50%, 10/15/23 77,090 77,862
8%, 9/15/07--7/15/25 7,427,365 7,638,724
8.50%, 9/15/21--11/15/22 557,624 580,973
9%, 11/15/16 3,034,429 3,222,868
9.50%, 9/15/17 205,766 221,878
-----------
90,922,891
-----------
Total Mortgage-Backed Obligations (Cost $397,217,770) 395,359,623
==========================================================
==========================================================
=============
U.S. GOVERNMENT OBLIGATIONS--39.4%
- ---------------------------------------------------------------------------------------------------------------------------------
AGENCY--0.4%
- ---------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY/ Small Business Administration:(5)
FULL FAITH--0.4% 10.125%, 7/25/06 167,347 184,198
10.625%, 7/25/06 226,777 239,202
10.625%, 6/25/06 278,641 293,908
9.875%, 7/25/05 240,585 253,766
10.625%, 5/25/06 136,869 144,369
10.375%, 1/25/02 308,270 325,160
10.625%, 11/25/06 480,665 507,001
-----------
1,947,604
- ---------------------------------------------------------------------------------------------------------------------------------
TREASURY--39.0% U.S. Treasury Bonds:
11.50%, 11/15/95 5,000,000 5,037,500
6.25%, 8/15/23 600,000 570,562
8.875%, 8/15/17 500,000 628,125
-------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
7.625%, 5/31/96 10,300,000 10,428,750
8%, 10/15/96(4) 43,290,000 44,277,527
8.75%, 10/15/97 9,700,000 10,230,463
8.875%, 2/15/96 6,000,000 6,071,250
9.25%, 1/15/96 5,700,000 5,758,778
9.375%, 4/15/96 102,700,000 104,721,840
-----------
187,724,795
-----------
Total U.S. Government Obligations (Cost $191,107,035) 189,672,399
</TABLE>
7 Oppenheimer Limited-Term Government Fund
<PAGE>
--------------------------------------
STATEMENT OF INVESTMENTS (Continued)
--------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $588,324,805) 121.4%
$585,032,022
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (21.4) (103,270,259)
------ ------------
NET ASSETS 100.0% $481,761,763
------ ------------
------ ------------
</TABLE>
1. When-issued security to be delivered and settled after September 30,
1995.
2. Interest-Only Strips represent the right to receive the monthly
interest payments on an underlying pool of mortgage loans. These
securities typically decline in price as interest rates decline. Most
other fixed-income securities increase in price when interest rates
decline. The principal amount of the underlying pool represents the
notional amount on which current interest is calculated. The price of
these securities is typically more sensitive to changes in prepayment
rates than traditional mortgage-backed securities (for example, GNMA
pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
3. Principal-Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans. The value of
these securities generally increases as interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity. Interest
rates disclosed represent current yields based upon the current cost basis
and estimated timing of future cash flows.
4. Securities with an aggregate market value of $721,082 are held in
escrow to cover initial margin requirements on open futures sales
contracts. See Note 7 of Notes to Financial Statements.
5. Represents the current interest rate for a variable rate security.
See accompanying Notes to Financial Statements.
<PAGE>
--------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 1995
--------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
==========================================================
==========================================================
=============
ASSETS Investments, at value (cost $588,324,805)--see accompanying statement $585,032,022
- ---------------------------------------------------------------------------------------------------------------------------------
Receivables:
Interest and principal paydowns 10,223,255
Shares of beneficial interest sold 3,915,457
-------------------------------------------------------------------------------------------------------------
Other 47,374
------------
Total assets 599,218,108
==========================================================
==========================================================
=============
LIABILITIES Bank overdraft 3,672,280
-------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis 110,753,455
Shares of beneficial interest redeemed 1,787,448
Dividends 787,054
Distribution and service plan fees--Note 4 261,346
Transfer and shareholder servicing agent fees--Note 4 58,193
Payable for daily variation on futures contracts--Note 7 46,875
Other 89,694
------------
Total liabilities 117,456,345
==========================================================
==========================================================
=============
NET ASSETS $481,761,763
------------
------------
==========================================================
==========================================================
=============
COMPOSITION OF Paid-in capital $492,491,079
NET ASSETS -------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,076,858
-------------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment and written option transactions (8,521,204)
-------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments--Note 3 (3,284,970)
------------
Net assets $481,761,763
------------
------------
==========================================================
==========================================================
=============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $346,014,524 and 33,135,502 shares of beneficial interest outstanding) $10.44
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.82
-------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $121,177,784 and 11,606,928 shares of beneficial interest outstanding) $10.44
-------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $14,569,455 and 1,396,645 shares of beneficial interest
outstanding $10.43
See accompanying Notes to Financial Statements.
</TABLE>
9 Oppenheimer Limited-Term Government Fund
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
---------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended September 30, 1995
---------------------------------------------------------------
==========================================================
==========================================================
=============
INVESTMENT INCOME Interest $29,927,571
==========================================================
==========================================================
=============
EXPENSES Management fees--Note 4 1,599,989
-------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 659,243
Class B 720,839
Class C 40,364
-------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 418,951
-------------------------------------------------------------------------------------------------------------
Shareholder reports 132,982
-------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 92,647
-------------------------------------------------------------------------------------------------------------
Legal and auditing fees 41,819
-------------------------------------------------------------------------------------------------------------
Insurance expenses 8,976
-------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,921
-------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 5,375
Class B 29,338
Class C 4,782
-------------------------------------------------------------------------------------------------------------
Other 35,232
-----------
Total expenses 3,793,458
==========================================================
==========================================================
=============
NET INVESTMENT INCOME 26,134,113
==========================================================
==========================================================
=============
REALIZED AND Net realized loss on:
UNREALIZED LOSS ON Investments (153,190)
INVESTMENTS AND Closing of futures contracts (1,467,909)
OPTIONS WRITTEN Closing of options written (129,075)
-----------
Net realized loss (1,750,174)
-------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 2,574,769
-----------
Net realized and unrealized gain on investments and options written 824,595
==========================================================
==========================================================
=============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$26,958,708
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Limited-Term Government Fund
<PAGE>
-----------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1995 1994
<S> <C> <C> <C>
==========================================================
==========================================================
=============
OPERATIONS Net investment income $ 26,134,113 $ 13,788,048
-------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and options written (1,750,174) 787,066
-------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 2,574,769 (12,973,109)
----------- -----------
Net increase in net assets resulting from operations 26,958,708 1,602,005
==========================================================
==========================================================
=============
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS Class A ($.761 and $.709 per share, respectively) (20,166,681) (12,491,113)
TO SHAREHOLDERS Class B ($.689 and $.62 per share, respectively) (4,762,585)
(900,631)
Class C ($.444 per share) (253,856) --
-------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A ($.002 per share) -- (44,628)
Class B ($.002 per share) -- (7,614)
-------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A ($.01 per share) -- (213,840)
Class B ($.01 per share) -- (36,486)
==========================================================
==========================================================
=============
BENEFICIAL Net increase in net assets resulting from Class A beneficial
INTEREST interest transactions--Note 2 116,780,567 60,069,439
TRANSACTIONS -------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class B beneficial
interest transactions--Note 2 81,900,018 34,737,604
-------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C beneficial
interest transactions--Note 2 14,569,935 --
==========================================================
==========================================================
=============
NET ASSETS Total increase 215,026,106 82,714,736
-------------------------------------------------------------------------------------------------------------
Beginning of period 266,735,657 184,020,921
------------ ------------
End of period [including undistributed (overdistributed)
net investment income of $1,076,858 and $(107,542), respectively] $481,761,763 $266,735,657
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Limited-Term Government Fund
<PAGE>
--------------------
FINANCIAL HIGHLIGHTS
--------------------
<TABLE>
<CAPTION>
CLASS A
------
YEAR ENDED SEPTEMBER 30,
1995 1994 1993 1992 1991 1990(4) 1989
<S> <C> <C> <C> <C> <C> <C>
<C>
==========================================================
==========================================================
============
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.40 $11.04 $10.97 $10.75 $10.18 $10.17 $10.14
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .79 .72 .73 .81 .87 .89 .90
Net realized and unrealized gain (loss)
on investments and options written .01 (.64) .07 .22 .57 .01 .03
-------- -------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations .80 .08 .80 1.03 1.44 .90 .93
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.76) (.71) (.73) (.81) (.87) (.89) (.90)
Dividends in excess of net investment income -- --(6) -- -- -- -- --
Tax return of capital distribution -- (.01) -- -- -- -- --
Distributions from net realized gain on
investments and options written -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total dividends and distributions to shareholders (.76) (.72) (.73) (.81) (.87) (.89) (.90)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.44 $10.40 $11.04 $10.97 $10.75 $10.18 $10.17
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
==========================================================
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(7) 8.03% .74% 7.61% 9.88% 14.69% 9.15%
9.65%
==========================================================
==========================================================
============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $346,015 $227,858 $178,944 $158,068 $167,974 $213,391 $237,819
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $274,313 $190,829 $161,318 $160,830 $192,404 $218,528 $243,863
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end
of period (in thousands) 33,136 21,906 16,206 14,416 15,624 20,964 23,395
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.64% 6.74% 6.70% 7.44% 8.27% 8.77% 8.96%
Expenses .91% .99% 1.02% .97% .98% .90% .93%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 261% 226% 74% 154% 112% 60% 61%
<FN>
1. For the period from February 1, 1995 (inception of offering) to September 30, 1995.
2. For the period from May 3, 1993 (inception of offering) to September 30, 1993.
3. For the period from March 10, 1986 (commencement of operations) to September 30, 1986.
4. On April 7, 1990, Oppenheimer Management Corporation became the investment advisor to the Fund.
5. Net investment income would have been $.84 and $.52 absent the voluntary reimbursement or waiver
of expenses, resulting in an expense ratio of 1.00% and 1.07% for 1987 and 1986, respectively.
6. Less than $.001 per share.
</FN>
</TABLE>
12 Oppenheimer Limited-Term Government Fund
<PAGE>
--------------------
Financial Highlights
--------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------------------- --------------------------------- ------
YEAR
ENDED
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
SEPT. 30,
1988 1987 1986(3) 1995 1994 1993(2) 1995(1)
<S> <C> <C> <C> <C> <C> <C>
<C>
==========================================================
==========================================================
============
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 9.72 $10.51 $10.56 $10.41 $11.06 $10.96 $10.32
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .89 .86(5) .57(5) .71 .62 .23 .45
Net realized and unrealized gain (loss)
on investments and options written .42 (.74) (.05) .01 (.64) .10 .10
-------- -------- -------- -------- ------- ------ --------
Total income (loss) from investment
operations 1.31 .12 .52 .72 (.02) .33 .55
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.89) (.86) (.57) (.69) (.62) (.23) (.44)
Dividends in excess of net investment income -- -- -- -- --(6) -- --
Tax return of capital distribution -- -- -- -- (.01) -- --
Distributions from net realized gain on
investments and options written -- (.05) -- -- -- -- --
-------- -------- -------- -------- ------- ------ --------
Total dividends and distributions to shareholders (.89) (.91) (.57) (.69) (.63) (.23) (.44)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.14 $ 9.72 $10.51 $10.44 $10.41 $11.06 $10.43
-------- -------- -------- -------- ------- ------ --------
-------- -------- -------- -------- ------- ------ --------
==========================================================
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(7) 13.86% .95% 4.97% 7.18% (.17)% 3.02%
5.47%
==========================================================
==========================================================
============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $251,794 $287,181 $127,797 $121,178 $38,877 $5,077 $14,569
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $267,557 $242,181 $105,123 $72,131 $15,801 $2,561 $6,112
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end
of period (in thousands) 24,834 29,560 12,162 11,607 3,734 459 1,397
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.75% 8.22% 7.93%(8) 6.80% 5.91% 4.81%(8)
6.51%(8)
Expenses .96% .56%(5) .08%(5)(8) 1.71% 1.79% 1.87%(8) 1.80%(8)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 78% 73% 471% 261% 226% 74% 261%
<FN>
7. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
8. Annualized.
9. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1995 were $1,205,339,188 and $991,409,240, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES.
Oppenheimer Limited-Term Government Fund (the Fund), is registered under
the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The Fund's investment advisor is
Oppenheimer Management Corporation (the Manager). The Fund offers Class
A, Class B and Class C shares. Class A shares are sold with a front-end
sales charge. Class B and Class C shares may be subject to a contingent
deferred sales charge. All three classes of shares have identical rights
to earnings, assets and voting privileges, except that each class has its
own distribution and/or service plan, expenses directly attributable to
a particular class and exclusive voting rights with respect to matters
affecting a single class. Class B shares will automatically convert to
Class A shares six years after the date of purchase. The following is a
summary of significant accounting policies consistently followed by the
Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted
securities for which such information is regularly reported are valued at
the last sale price of the day or, in the absence of sales, at values
based on the closing bid or asked price or the last sale price on the
prior trading day. Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service approved by the Board
of Trustees. Such securities which cannot be valued by the approved
portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or are valued
under consistently applied procedures established by the Board of Trustees
to determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at
cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. Forward contracts are valued based
on the closing prices of the forward currency contract rates in the London
foreign exchange markets on a daily basis as provided by a reliable bank
or dealer. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the
prior trading date if it is within the spread between the closing bid and
asked prices. If the last sale price is outside the spread, the closing
bid or asked price closest to the last reported sale price is used.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for
securities that have been purchased by the Fund on a forward commitment
or when-issued basis can take place a month or more after the transaction
date. During the period, such securities do not earn interest, are subject
to market fluctuation and may increase or decrease in value prior to their
delivery. The Fund maintains, in a segregated account with its custodian,
assets with a market value equal to the amount of its purchase
commitments. The purchase of securities on a when-issued or forward
commitment basis may increase the volatility of the Fund's net asset value
to the extent the Fund makes such purchases while remaining substantially
fully invested. As of September 30, 1995, the Fund had entered into
outstanding when-issued or forward commitments of $110,753,455.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Fund may enter into mortgage "dollar-rolls"
in which the Fund sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar
(same type, coupon and maturity) but not identical securities on a
specified future date. The Fund records each dollar-roll as a sale and a
new purchase transaction.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain
on investments not offset by loss carryovers, to shareholders. Therefore,
no federal income or excise tax provision is required.
At September 30, 1995, the Fund had available for federal income tax
purposes an unused capital loss carryover of approximately $5,747,000,
expiring between 1996 and 2002.
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B and Class C shares from net investment
income each day the New York Stock Exchange is open for business and pay
such dividends monthly. Distributions from net realized gains on
investments, if any, will be declared at least once each year.
Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes primarily because of paydown gains
and losses. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended September 30, 1995, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during
the year ended September 30, 1995, amounts have been reclassified to
reflect an increase in undistributed net investment income of $233,410,
a decrease in paid-in capital of $19,870, and an increase in accumulated
net realized loss on investments of $213,540.
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Discount on securities
purchased is amortized over the life of the respective securities, in
accordance with federal income tax requirements. Realized gains and losses
on investments and unrealized appreciation and depreciation are determined
on an identified cost basis, which is the same basis used for federal
income tax purposes.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1995(1) YEAR ENDED SEPTEMBER
30, 1994
-------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Class A:
Sold 18,462,358 $ 191,899,002 11,073,786 $ 117,379,950
Dividends reinvested 1,399,150 14,547,766 817,206 8,727,397
Issued in connection with the
acquisition of Oppenheimer
Strategic Short-Term Income Fund--Note 6 1,615,189 16,862,577 -- --
Redeemed (10,247,223) (106,528,778) (6,191,329) (66,037,908)
----------- ------------- ----------- -------------
Net increase 11,229,474 $ 116,780,567 5,699,663 $ 60,069,439
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
---------------------------------------------------------------------------------------------------------------
Class B:
Sold 8,638,202 $ 89,826,104 3,707,813 $ 39,327,532
Dividends reinvested 310,362 3,231,003 68,487 725,648
Issued in connection with the
acquisition of Oppenheimer
Strategic Short-Term Income Fund--Note 6 810,988 8,466,715 -- --
Redeemed (1,886,739) (19,623,804) (501,397) (5,315,576)
----------- ------------- ----------- -------------
Net increase 7,872,813 $ 81,900,018 3,274,903 $ 34,737,604
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
---------------------------------------------------------------------------------------------------------------
Class C:
Sold 1,483,730 $ 15,478,180 -- $ --
Dividends reinvested 20,278 211,531 -- --
Redeemed (107,363) (1,119,776) -- --
----------- ------------- ----------- -------------
Net increase 1,396,645 $ 14,569,935 -- $ --
----------- ------------- ----------- -------------
<FN> ----------- ------------- ----------- -------------
1. For the year ended September 30, 1995 for Class A and Class B shares and for the period from
February 1, 1995 (inception of offering) to September 30, 1995 for Class C shares.
</FN>
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS. At September 30, 1995, net
unrealized depreciation on investments of $3,284,970 was composed of gross
appreciation of $6,315,939, and gross depreciation of $9,600,909.
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Management
fees paid to the Manager were in accordance with the investment advisory
agreement with the Fund which provides for a fee of .50% on the first $100
million of average annual net assets, .45% on the next $150 million, .425%
on the next $250 million and .40% on net assets in excess of $500 million.
The Manager has agreed to reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent state regulatory limit on
Fund expenses.
The Manager acts as the accounting agent for the Fund at an annual fee of
$12,000, plus out-of-pocket costs and expenses reasonably incurred. For
the year ended September 30, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $2,605,966, of which
$681,961 was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales
of the Fund's Class B shares totaled $2,213,585, of which $101,273 was
paid to an affiliated broker/dealer.
during the year ended September 30, 1995, OFDI received contingent
deferred sales charges of $170,089 and $6,307, respectively, upon
redemption of Class B and Class C shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such
services are allocated ratably to these companies. Under separate approved
plans, each class may expend up to .25% of its net assets annually to
reimburse OFDI for costs incurred in connection with the personal service
and maintenance of accounts that hold shares of the Fund, including
amounts paid to brokers, dealers, banks and other institutions. In
addition, Class B and Class C shares are subject to an asset-based sales
charge of .75% of net assets annually, to reimburse OFDI for sales
commissions paid from its own resources at the time of sale and associated
financing costs. In the event of termination or discontinuAnce of the
Class B or Class C plan, the Board of Trustees may allow the Fund to
continue payment of the asset-based sales charge to OFDI for distribution
expenses incurred on Class B or Class C shares sold prior to termination
or discontinuance of the plan. At September 30, 1995, OFDI had incurred
unreimbursed expenses of $3,744,614. During the year ended September 30,
1995, OFDI paid $24,157 and $4,892, respectively, to an affiliated
broker/dealer as reimbursement for Class A and Class B personal service
and maintenance expenses and retained $673,962 and $39,445, respectively,
as reimbursement for Class B and Class C sales commissions and service fee
advances, as well as financing costs.
5. PUT OPTION ACTIVITY. The Fund may buy and sell put and call options,
or write covered put and call options on portfolio securities in order to
produce incremental earnings or protect against changes in the value of
portfolio securities. The Fund generally purchases put options or writes
covered call options to hedge against adverse movements in the value of
portfolio holdings. When an option is written, the Fund receives a premium
and becomes obligated to sell or purchase the underlying security at a
fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is
exercised, the proceeds on sales for a written call option, the purchase
cost for a written put option, or the cost of the security for a purchased
put or call option is adjusted by the amount of premium received or paid.
In this report, securities designated to cover outstanding call options
are noted in the Statement of Investments. Shares subject to call,
expiration date, exercise price, premium received and market value are
detailed in a footnote to the Statement of Investments.
Options written are reported as a liability in the Statement of Assets and
Liabilities. Gains and losses are reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and
the option is exercised. The risk in writing a put option is that the Fund
may incur a loss if the market price of the security decreases and the
option is exercised. The risk in buying an option is that the Fund pays
a premium whether or not the option is exercised. The Fund also has the
additional risk of not being able to enter into a closing transaction if
a liquid secondary market does not exist.
<TABLE>
<CAPTION>
Written option activity for the year ended September 30, 1995 was as follows:
NUMBER OF AMOUNT OF
PUT OPTION ACTIVITY OPTIONS PREMIUMS
<S> <C> <C>
------------------------------------------------------------------------------------------
Options outstanding at September 30, 1994 60,000 $121,875
------------------------------------------------------------------------------------------
Options written -- --
------------------------------------------------------------------------------------------
Options expired prior to exercise -- --
------------------------------------------------------------------------------------------
Options closed (60,000) (121,875)
------- --------
Options outstanding at September 30, 1995 -- $ --
------- --------
------- --------
</TABLE>
<PAGE>
6. ACQUISITION OF OPPENHEIMER STRATEGIC SHORT-TERM INCOME FUND. On
September 22, 1995, the Fund acquired all of the net assets of Oppenheimer
Strategic Short-Term Income Fund, pursuant to an Agreement and Plan of
Reorganization approved by the Oppenheimer Strategic Short-Term Income
Fund shareholders on February 28, 1995. The Fund issued 1,615,189 and
810,988 shares of beneficial interest for Class A and Class B,
respectively, valued at $16,862,577 and $8,466,715 in exchange for the net
assets, resulting in combined Class A net assets of $342,039,434 and
Class B net assets of $118,635,825 on September 22, 1995. The exchange
qualified as a tax-free reorganization for federal income tax purposes.
7. FUTURES CONTRACTS. The Fund may buy and sell interest rate futures
contracts in order to gain exposure to or protect against changes in
interest rates. The Fund may also buy or write put or call options on
these futures contracts. The Fund generally sells futures contracts to
hedge against increases in interest rates and the resulting negative
effect on the value of fixed rate portfolio securities.
The Fund may also purchase futures contracts to gain exposure to changes
in interest rates as it may be more efficient or cost effective than
actually buying fixed income securities. Upon entering into a futures
contract, the Fund is required to deposit either cash or securities in an
amount (initial margin) equal to a certain percentage of the contract
value. Subsequent payments (variation margin) are made or received by the
Fund each day. The variation margin payments are equal to the daily
changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires. Securities held in collateralized accounts to cover
initial margin requirements on open futures contracts are noted in the
Statement of Investments. The Statement of Assets and Liabilities reflects
a receivable or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the
value of the underlying securities.
<TABLE>
<CAPTION>
At September 30, 1995, the Fund had outstanding futures contracts
to sell debt securities as follows:
Expiration Number of Valuation as of Unrealized
Security Date Futures Contracts September 30, 1995 Appreciation
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
U.S. Treasury Nts. 12/95 125 $25,902,343 $7,813
</TABLE>
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
<PAGE>
_____________________
*For purposes of the Fund's investment policy not to concentrate in
securities of issuers in the same industry, utilities are divided into
"industries" according to their services (e.g., gas utilities, gas
transmission utilities, electric utilities and telephone utilities are
each considered a separate industry).
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Financial Highlights (see Parts A and B): Filed herewith.
(2) Independent Auditors' Report (see Part B): Filed herewith.
(3) Statement of Investments (see Part B): Filed herewith.
(4) Statement of Assets and Liabilities (see Part B): Filed herewith.
(5) Statement of Operations (see Part B): Filed herewith.
(6) Statements of Changes in Net Assets (see Part B): Filed herewith.
(7) Notes to Financial Statements (see Part B): Filed herewith.
(b) Exhibits
(1) Amended and Restated Agreement and Declaration of Trust dated January
16, 1995: Filed with Post-Effective Amendment No. 20, 2/1/95, and
incorporated herein by reference.
(2) Amended By-Laws as of August, 1990: Previously filed with
Post-Effective Amendment No. 8 to Registrant's Registration Statement,
2/1/91, and refiled with Post-Effective Amendment No. 20, 2/1/95, and
incorporated herein by reference.
(3) Not applicable.
(4)(i) Class A Specimen Share Certificate: Filed with Post-Effective
Amendment No. 20, 2/1/95, and incorporated herein by reference.
(ii) Class B Specimen Share Certificate: Filed with Post-Effective
Amendment No. 20, 2/1/95, and incorporated herein by reference.
(iii) Class C Specimen Share Certificate: Filed with Post-Effective
Amendment No. 20, 2/1/95, and incorporated herein by reference.
(5) Investment Advisory Agreement dated October 22, 1990: Filed with
Post-Effective Amendment No. 7 to Registrant's Registration Statement,
12/3/90, refiled with Registrant's Post-Effective Amendment No. 19,
12/2/94, pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(6)(i) General Distributor's Agreement dated October 13, 1992, with
Oppenheimer Fund Management, Inc.: Filed with Post-Effective Amendment No.
12 of the Registrant's Registration Statement, 12/2/92, and refiled with
Registrant's Post-Effective Amendment No. 19, 12/2/94, pursuant to Item
102 of Regulation S-T, and incorporated herein by reference.
(ii) Form of Dealer Agreement of Oppenheimer Funds Distributor, Inc.:
Filed with Post-Effective Amendment No. 14 Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker Agreement: Filed
with Post-Effective Amendment No. 14 Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850), 9/30/94, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency Agreement: Filed
with Post-Effective Amendment No. 14 Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850), 9/30/94, and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund Management, Inc. and
Newbridge Securities, dated 10/1/86: Previously filed with Post-Effective
Amendment No. 25 of Oppenheimer Growth Fund (Reg. No. 2-45272), 11/1/86,
refiled with Post-Effective Amendment No. 47 of Oppenheimer Growth Fund
(Reg. No. 2-45272), 10/21/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(7) Retirement Plan for Non-Interested Trustees or Directors (adopted by
Registrant - 6/7/90): Previously filed with Post-Effective Amendment No.
97 of Oppenheimer Fund (Reg. No. 2-14586), 8/30/90, refiled with Post-
Effective Amendment No. 45 of Oppenheimer Growth Fund (Reg. No. 2-45272),
8/22/94, pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(8) Custodian Agreement dated 6/1/90 with Citibank, N.A.: Filed with
Registrant's Post-Effective Amendment No. 8, 2/1/91, refiled with
Registrant's Post-Effective Amendment No. 19, 12/2/94 pursuant to Item 102
of Regulation S-T, and incorporated herein by reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated February 26, 1986: Previously
filed with Registrant's Registration Statement, and refiled with Post-
Effective Amendment No 20, 2/1/95, and incorporated herein by reference.
(11) Independent Auditors' Consent: Filed herewith.
(12) Not applicable.
(13) Subscription Agreement and Investment letter: Previously filed with
Registrant's Registration Statement, and incorporated herein by reference.
(14) (i) Form of Individual Retirement Account (IRA) Plan: Previously
filed with Post-Effective Amendment No. 21 to the Registration Statement
of Oppenheimer U.S. Government Trust (File No. 2-76645), 8/25/93, and
incorporated herein by reference.
(ii) Form of Prototype Standardized and Non-Standardized Profit Sharing
and Money Purchase Pension Plan for self-employed persons in corporations:
Filed with Post-Effective Amendment No. 15 to the Registration Statement
of Oppenheimer Mortgage Income Fund (Reg. No. 33-6614), 1/19/95, and
incorporated herein by reference.
(iii) Form of Tax Sheltered Retirement Plan and Custody Agreement for
employees of public schools and tax-exempt organizations: Previously filed
with Post-Effective Amendment No. 47 to the Registration Statement of
Oppenheimer Growth Fund (File No. 2-45272), 10/21/94, and incorporated
herein by reference.
(iv) Form of Simplified Employee Pension IRA: Previously filed with Post-
Effective Amendment No. 42 to the Registration Statement of Oppenheimer
Equity Income Fund (Reg. No. 2-33043), 10/28/94, and incorporated herein
by reference.
(v) Form of Prototype 401(k) Plan: Previously filed with Post-Effective
Amendment No. 7 to the Registration Statement of Oppenheimer Strategic
Income Fund (Reg. No. 33-47378), 9/28/95, and incorporated herein by
reference.
(15) (i) Service Plan and Agreement for Class A shares dated 6/22/93
pursuant to Rule 12b-1: Previously filed with Registrant's Post-Effective
Amendment No. 16, 1/27/94, and incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for Class B shares dated
6/29/95 pursuant to Rule 12b-1: Filed herewith.
(iii) Distribution and Service Plan and Agreement for Class C shares
dated 6/29/95 pursuant to Rule 12b-1: Filed herewith.
(16) Performance Data Computation Schedule: Filed herewith.
(17) (a) Financial Data Schedule for Class A shares: Filed herewith.
(b) Financial Data Schedule for Class B shares: Filed herewith.
(c) Financial Data Schedule for Class C shares: Filed herewith.
(18) OppenheimerFunds Multiple Class Plan under Rule 18f-3 dated 10/24/95:
Previously filed with Post-Effective Amendment No. 12 to the Registration
Statement of Oppenheimer California Tax-Exempt Fund (Reg. No. 33-23566),
11/1/95 and incorporated herein by reference.
-- Powers of Attorney (including certified Board resolutions):
Filed herewith (Bridget A. Macaskill) and previously filed (all other
Trustees) with Post-Effective Amendment No. 15 to Registrant's
Registration Statement, 12/3/93, and incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
Number of
Record Holders as
Title of Class of January 12, 1996
Shares of Beneficial Interest
of Class A Shares 16,095
Shares of Beneficial Interest
of Class B Shares 7,140
Shares of Beneficial Interest
of Class C Shares 904
Item 27. Indemnification
Reference is made to Article VIII of Registrant's Agreement and
Declaration of Trust filed as Exhibit 24(b)(1) to this Registration
Statement and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts
A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
officer and director of OppenheimerFunds, Inc. is, or at any time during
the past two fiscal years has been, engaged for his/her own account or in
the capacity of director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections with
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
<S> <C>
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer Funds
(listed below); previously a Fund
Controller for OppenheimerFunds,
Inc. (the "Manager").
Bruce Bartlett,
Vice President Vice President and Portfolio
Manager of Oppenheimer Total Return
Fund, Inc., Oppenheimer Main Street
Funds, Inc. and Oppenheimer
Variable Account Funds; formerly a
Vice President and Senior Portfolio
Manager at First of America
Investment Corp.
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Secretary and Treasurer of the
Denver-based Oppenheimer Funds.
Vice President and Treasurer of
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of
the Manager; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent
subsidiaries of the Manager;
President, Treasurer and Director
of Centennial Capital Corporation;
Vice President and Treasurer of
Main Street Advisers.
Michael A. Carbuto,
Vice President Vice President and Portfolio
Manager of Centennial California
Tax Exempt Trust, Centennial New
York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice
President of Centennial.
William Colbourne,
Assistant Vice President Formerly, Director of Alternative
Staffing Resources, and Vice
President of Human Resources,
American Cancer Society.
Lynn Coluccy,
Vice President Formerly Vice President / Director
of Internal Audit of the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio
Manager of Oppenheimer Growth Fund,
Oppenheimer Variable Account Funds;
Senior Vice President and Portfolio
Manager of Oppenheimer Strategic
Income & Growth Fund; Vice
President of Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest
Officers Value Fund, Oppen-heimer
Quest For Value Funds and
Oppenheimer Quest Global Value
Fund, Inc.
John Doney,
Vice President Vice President and Portfolio
Manager of Oppenheimer Equity
Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-
basedOppenheimer Funds; Vice
President of the Denver-based
Oppenheimer Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a director of
Centennial; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
Kenneth C. Eich,
Executive Vice President /
Chief Financial Officer Treasurer of Oppenheimer
Acquisition Corporation ("OAC").
George Evans,
Vice President Vice President and Portfolio
Manager of Oppenheimer Global
Emerging Growth Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the
Oppenheimer Funds; previously a
Fund Controller for the Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView, Main
Street Advisers, Inc. and
Centennial; Secretary, Vice
President and Director of
Centennial Capital Corp.
Ronald H. Fielding,
Senior Vice President Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"); President and
Director of Fielding Management
Company, Inc. ("FMC"); President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"); President
and Director of Rochester Fund
Services, Inc. ("RFS"); President
and Director of Rochester Tax
Managed Fund, Inc.; Vice President
and Portfolio Manager of Rochester
Fund Municipals and Rochester
Portfolio Series - Limited Term New
York Municipal Fund.
Jon S. Fossel,
Chairman of the Board and Director Director of OAC, the Manager's
parent holding company; President,
CEO and a director of HarbourView;
a director of SSI and SFSI;
President, Director, Trustee, and
Managing General Partner of the
Denver-based Oppenheimer Funds;
President and Chairman of the Board
of Main Street Advisers, Inc.;
formerly Chief Executive Officer of
the Manager.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: a
director of the Distributor, Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer Funds
and Executive Vice President &
General Counsel of the Manager and
the Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez,
Vice President Formerly 1st Vice President /
Director of Creative Services for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht,
Vice President Vice President and Portfolio
Manager of Oppenheimer Insured Tax-
Exempt Fund and Oppenheimer
Intermediate Tax Exempt Fund; an
officer of other Oppenheimer Funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Barbara Hennigar,
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Manager President and Director of SFSI.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus &
Company, an advertising agency.
Frank Jennings,
Vice President Portfolio Manager of Oppenheimer
Global Growth & Income Fund.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe,
Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of Oppenheimer
Variable Account Funds and
Oppenheimer Variable Account Funds;
Associate Portfolio Manager of
Oppenheimer Discovery Fund.
Formerly a Securities Analyst for
Columbus Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Senior Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the Oppenheimer Funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of Main
Street Advisers, Inc.; and Chairman
of SSI.
Sally Marzouk,
Vice President None.
Marilyn Miller,
Vice President Formerly a Director of marketing
for TransAmerica Fund Management
Company.
Robert J. Milnamow,
Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Asset
Allocation Fund, Oppenheimer
Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund; an
officer of other Oppenheimer Funds.
Barbara Niederbrach,
Assistant Vice President None.
Stuart Novek,
Vice President Formerly a Director Account
Supervisor for J. Walter Thompson.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc., Oppenheimer Multi-
State Tax-Exempt Trust, Oppenheimer
Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond
Fund; Vice President of The New
York Tax-Exempt Income Fund, Inc.;
Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
Jane Putnam,
Vice President Associate Portfolio Manager of
Oppenheimer Growth Fund; Vice
President and Portfolio Manager of
Oppenheimer Target Fund and
Oppenheimer Variable Account Funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Formerly an International Finance
Consultant for Dow Chemical.
Thomas Reedy,
Vice President Vice President of Oppenheimer
Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust;
an officer of other Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Assistant Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President Vice President of RFS; President
and Director of RFD; Vice President
and Director of FMC; Vice President
and director of RCAI; General
Partner of RCA; Vice President and
Director of Rochester Tax Managed
Fund Inc.; Vice President and
Portfolio Manager of Rochester Fund
Series - The Bond Fund For Growth.
David Rosenberg,
Vice President Vice President and Portfolio
Manager of Oppenheimer Limited-Term
Government Fund, Oppenheimer U.S.
Government Trust and Oppenheimer
Integrity Funds. Formerly Vice
President and Senior Portfolio
Manager for Delaware Investment
Advisors.
Richard H. Rubinstein,
Vice President Vice President and Portfolio
Manager of Oppenheimer Asset
Allocation Fund, Oppenheimer Fund
and Oppenheimer Variable Account
Funds; an officer of other
Oppenheimer Funds; formerly Vice
President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin,
Vice President Vice President and Portfolio
Manager of Oppenheimer Gold &
Special Minerals Fund, Oppenheimer
Total Return Fund, Inc. Oppenheimer
Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and
Senior Portfolio Manager for Dean
Witter InterCapital, Inc.
Nancy Sperte,
Senior Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Trustee of the New York-based
Oppenheimer Funds; formerly
Chairman of the Manager and the
Distributor.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Strategic
Income Fund, Oppenheimer Strategic
Income & Growth Fund; an officer of
other Oppenheimer Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Champion
Income Fund and Oppenheimer High
Yield Fund; an officer of other
Oppenheimer Funds.
John Stoma,
Vice President Formerly Vice President of Pension
Marketing with Manulife Financial.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director of Centennial;
formerly President and Director of
OAMC, and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Jeffrey Van Giesen,
Vice President Formerly employed by Kidder Peabody
Asset Management.
Ashwin Vasan,
Vice President Vice President and Portfolio
Manager of Oppenheimer Multi-Sector
Income Trust, Oppenheimer Multi-
Government Trust and Oppenheimer
International Bond Fund; an officer
of other Oppenheimer Funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President Vice President and Portfolio
Manager of Daily Cash Accumulation
Fund, Inc., Oppenheimer Cash
Reserves, Centennial America Fund,
L.P., Centennial Government Trust
and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells,
Vice President None.
William L. Wilby,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Global
Fund and Oppenheimer Global Growth
& Income Fund; Vice President of
HarbourView; an officer of other
Oppenheimer Funds.
Susan Wilson-Perez,
Vice President None.
Carol Wolf,
Vice President Vice President and Portfolio
Manager of Oppenheimer Money Market
Fund, Inc., Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
Arthur J. Zimmer,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial; an officer of other
Oppenheimer Funds.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds and the
Denver-based Oppenheimer Funds set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Rochester-based Funds
- ---------------------
Rochester Fund Municipals
Rochester Fund Series - The Bond Fund For
Growth
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer
Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset Management
Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition
Corp. is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., and Main Street Advisers, Inc. is 3410 South Galena Street, Denver,
Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of Registrant's
shares. It is also the Distributor of each of the other registered open-
end investment companies for which OppenheimerFunds, Inc. is the
investment adviser, as described in Part A and B of this Registration
Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
<TABLE>
<CAPTION> Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
George Clarence Bowen+ Vice President & Treasurer Vice President
and Treasurer
of the NY-based
Oppenheimer
funds / Vice
President,
Secretary and
Treasurer of
the Denver-
based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
1400 Laurel Avenue
Apt. W710
Minneapolis, MN 55403
Mary Crooks+ Vice President None
Paul Delli-Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary of
President & Director the New York-
based Oppen-
heimer funds /
Vice President
of the Denver-
based Oppen-
heimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President None
Reed F. Finley Vice President - None
1657 Graefield Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
19 Spinnaker Way
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
Michael S. Rosen++ Vice President None
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
William Harvey Young+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of
OppenheimerFunds, Inc. at its offices at 3410 South Galena Street, Denver,
Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver and State of Colorado on
the 22nd day of January, 1996.
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
By: /s/ James C. Swain*
----------------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ James C. Swain* Chairman of the
- ------------------ Board of Trustees January 22, 1996
James C. Swain
/s/ Jon S. Fossel*
- -------------------- Trustee January 22, 1996
Jon S. Fossel
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting January 22, 1996
George C. Bowen Officer
/s/ Robert G. Avis* Trustee January 22, 1996
- ------------------
Robert G. Avis
/s/ William A. Baker* Trustee January 22, 1996
- --------------------
William A. Baker
/s/ Charles Conrad, Jr.* Trustee January 22, 1996
- -----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski* Trustee January 22, 1996
- -------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast* Trustee January 22, 1996
- ------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee January 22, 1996
- ----------------------
Robert M. Kirchner
/s/ Bridget A. Macaskill* President and
- ------------------------ Trustee January 22, 1996
Bridget A. Macaskill
/s/ Ned M. Steel* Trustee January 22, 1996
- ----------------
Ned M. Steel
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
Registration No. 33-02769
Post-Effective Amendment No. 21
Index to Exhibits
Exhibit No. Description
24(b)(11) Independent Auditors' Consent
24(b)15(ii) Distribution and Service Plan and Agreement for Class
B Shares dated 6/29/95
24(b)(15)(iii) Distribution and Service Plan and Agreement for Class
C Shares dated 6/29/95
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A shares
24(b)(17)(ii) Financial Data Schedule for Class B shares
24(b)(17)(iii) Financial Data Schedule for Class C shares
__ Power of Attorney for Bridget A. Macaskill
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Limited-Term Government Fund:
We consent to the use in this Post-Effective Amendment No. 21 to
Registration Statement No. 33-02769 of Oppenheimer Limited-Term
Government Fund of our report dated October 20, 1995 appearing in
the Statement of Additional Information, which is a part of such
Registration Statement, and to the reference to us firm under the
heading "Financial Highlights" appearing in the Prospectus, which
is also a part of such Registration Statement.
/s/ Deloitte & Touche LLP
- --------------------------
DELOITTE & TOUCHE, LLP
Denver, Colorado
January 18, 1996
Exhibit 24(b)(15)(ii)
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS B SHARES OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the
29th day of June, 1995, by and between OPPENHEIMER LIMITED-TERM GOVERNMENT
FUND (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and
service plan for Class B shares of the Fund (the "Shares"), contemplated
by Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 (the
"1940 Act"), pursuant to which the Fund will compensate the Distributor
for its services incurred in connection with the distribution of Shares,
and the personal service and maintenance of shareholder accounts that hold
Shares ("Accounts"). The Fund may act as distributor of securities of
which it is the issuer, pursuant to the Rule, according to the terms of
this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended
to have certain rights as third-party beneficiaries under this Plan. The
terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the
1940 Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., or
its successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall
have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by Customers
(defined below) of the Recipient; (ii) shall furnish the Distributor (on
behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning the
sale of Shares; and (iii) has been selected by the Distributor to receive
payments under the Plan. Notwithstanding the foregoing, a majority of the
Fund's Board of Trustees (the "Board") who are not "interested persons"
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of this Plan or in any agreements relating to
this Plan (the "Independent Trustees") may remove any broker, dealer, bank
or other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively, the
"Customers"), but in no event shall any such Shares be deemed owned by
more than one Recipient for purposes of this Plan. In the event that more
than one person or entity would otherwise qualify as Recipients as to the
same Shares, the Recipient which is the dealer of record on the Fund's
books as determined by the Distributor shall be deemed the Recipient as
to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the aggregate
amount of 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares computed
as of the close of each business day (the "Service Fee"), plus (ii) within
ten (10) days of the end of each month, in the aggregate amount of 0.0625%
(0.75% on an annual basis) of the average during the month of the
aggregate net asset value of Shares computed as of the close of each
business day (the "Asset-Based Sales Charge") outstanding for six years
or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate
the Distributor and Recipients for providing distribution assistance in
connection with the sales of Shares.
The administrative support services in connection with the Accounts
to be rendered by Recipients may include, but shall not be limited to, the
following: answering routine inquiries concerning the Fund, assisting in
the establishment and maintenance of accounts or sub-accounts in the Fund
and processing Share redemption transactions, making the Fund's investment
plans and dividend payment options available, and providing such other
information and services in connection with the rendering of personal
services and/or the maintenance of Accounts, as the Distributor or the
Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to
be rendered by the Distributor and Recipients may include, but shall not
be limited to, the following: distributing sales literature and
prospectuses other than those furnished to current holders of the Fund's
Shares ("Shareholders"), and providing such other information and services
in connection with the distribution of Shares as the Distributor or the
Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment under
the Plan if it has Qualified Holdings of Shares to entitle it to payments
under the Plan. In the event that either the Distributor or the Board
should have reason to believe that, notwithstanding the level of Qualified
Holdings, a Recipient may not be rendering appropriate distribution
assistance in connection with the sale of Shares or administrative support
services for Accounts, then the Distributor, at the request of the Board,
shall require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may
take appropriate steps to terminate the Recipient's status as such under
the Plan, whereupon such Recipient's rights as a third-party beneficiary
hereunder shall terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
Shares computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient or by
its Customers for a period of more than the minimum period (the "Minimum
Holding Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make service
fee payments ("Advance Service Fee Payments") to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at a rate
not to exceed (i) 0.25% of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of business
on the day such Shares are sold, constituting Qualified Holdings sold by
the Recipient during that quarter and owned beneficially or of record by
the Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than one (1) year,
subject to reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients that are, or
may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the
date such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance Service Fee
Payments, based on the ratio of the time such shares were held to one (1)
year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more often
than quarterly, and sooner than the end of the calendar quarter. However,
no such payments shall be made to any Recipient for any such quarter in
which its Qualified Holdings do not equal or exceed, at the end of such
quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to be
set from time to time by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from time
to time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth
above, and/or direct the Distributor to increase or decrease the Maximum
Holding Period, the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings, Maximum Holding Period and Minimum Holding Period, if
any, and the rate of payments hereunder applicable to Recipients, and
shall provide each Recipient with written notice within thirty (30) days
after any change in these provisions. Inclusion of such provisions or a
change in such provisions in a revised current prospectus shall constitute
sufficient notice. The Distributor may make Plan payments to any
"affiliated person" (as defined in the 1940 Act) of the Distributor if
such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits to
which the Distributor is, or may become, subject under Article III,
Section 26, of the NASD Rules of Fair Practice. The distribution
assistance and administrative support services to be rendered by the
Distributor in connection with the Shares may include, but shall not be
limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying
such persons Advance Service Fee Payments in advance of, and\or greater
than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing
or providing such financing from its own resources, or from an affiliate,
for the interest and other borrowing costs of the Distributor's
unreimbursed expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to
current Shareholders) and state "blue sky" registration expenses; and (v)
providing any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services rendered in
connection with Shares acquired (i) by purchase, (ii) in exchange for
shares of another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board
should have reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support services in
connection with the sale of Shares, then the Distributor, at the request
of the Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources (which
may include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OMC), from its own
resources, from Asset-Based Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the Distributor.
In no event shall the amounts to be paid to the Distributor exceed the
rate of fees to be paid by the Fund to the Distributor set forth in
paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be Trustees of
the Fund who are not "interested persons" of the Fund ("Disinterested
Trustees") shall be committed to the discretion of such Disinterested
Trustees. Nothing herein shall prevent the Disinterested Trustees from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the
Fund shall provide written reports to the Fund's Board for its review,
detailing services rendered in connection with the distribution of the
Shares, the amount of all payments made and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall
state whether all provisions of Section 3 of this Plan have been complied
with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by a vote of a majority of
the Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Plan has been approved by a vote of the Board and its Independent Trustees
cast in person at a meeting called on April 18, 1995, for the purpose of
voting on this Plan, and shall take effect after approved by Class B
shareholders of the Fund, at which time it shall replace the Fund's
Distribution and Service Plan and Agreement for the Shares dated February
23, 1994. Unless terminated as hereinafter provided, it shall continue
in effect from year to year thereafter or as the Board may otherwise
determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially the
amount of payments to be made without approval of the Class B
Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall be
entitled to payment from the Fund of all or a portion of the Service Fee
and/or the Asset-Based Sales Charge in respect of Shares sold prior to the
effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor
understands that the obligations of the Fund under this Plan are not
binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder and Trustee liability for acts or obligations of
the Fund.
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
By: /s/ Robert G. Zack
-----------------------------------------
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
--------------------------------------
Katherine P. Feld, Vice President & Secretary
OFMI\855B.2
Exhibit 24(b)(15)(iii)
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
FOR CLASS C SHARES OF
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated the
29th day of June, 1995, by and between OPPENHEIMER LIMITED-TERM GOVERNMENT
FUND (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and
service plan for Class C shares of the Fund (the "Shares"), contemplated
by Rule 12b-1 (the "Rule") under the Investment Company Act of 1940 (the
"1940 Act"), pursuant to which the Fund will compensate the Distributor
for its services incurred in connection with the distribution of Shares,
and the personal service and maintenance of shareholder accounts that hold
Shares ("Accounts"). The Fund may act as distributor of securities of
which it is the issuer, pursuant to the Rule, according to the terms of
this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended
to have certain rights as third-party beneficiaries under this Plan. The
terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the
1940 Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., or
its successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall
have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by Customers
(defined below) of the Recipient; (ii) shall furnish the Distributor (on
behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning the
sale of Shares; and (iii) has been selected by the Distributor to receive
payments under the Plan. Notwithstanding the foregoing, a majority of the
Fund's Board of Trustees (the "Board") who are not "interested persons"
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of this Plan or in any agreements relating to
this Plan (the "Independent Trustees") may remove any broker, dealer, bank
or other person or entity as a Recipient, whereupon such person's or
entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively, the
"Customers"), but in no event shall any such Shares be deemed owned by
more than one Recipient for purposes of this Plan. In the event that more
than one person or entity would otherwise qualify as Recipients as to the
same Shares, the Recipient which is the dealer of record on the Fund's
books as determined by the Distributor shall be deemed the Recipient as
to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount (i) of 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares computed
as of the close of each business day (the "Service Fee"), plus (ii)
0.1875% (0.75% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of the Shares computed as of the
close of each business day (the "Asset Based Sales Charge"). Such Service
Fee payments received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with respect to
Accounts. Such Asset Based Sales Charge payments received from the Fund
will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts
to be rendered by Recipients may include, but shall not be limited to, the
following: answering routine inquiries concerning the Fund, assisting in
establishing and maintaining accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's investment
plans and dividend payment options available, and providing such other
information and services in connection with the rendering of personal
services and/or the maintenance of Accounts, as the Distributor or the
Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to
be rendered by Recipients may include, but shall not be limited to, the
following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably
request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment under
the Plan if it has Qualified Holdings of Shares to entitle it to payments
under the Plan. In the event that either the Distributor or the Board
should have reason to believe that, notwithstanding the level of Qualified
Holdings, a Recipient may not be rendering appropriate distribution
assistance in connection with the sale of Shares or administrative support
services for the Accounts, then the Distributor, at the request of the
Board, shall require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may
take appropriate steps to terminate the Recipient's status as such under
the Plan, whereupon such Recipient's rights as a third-party beneficiary
hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of each business day
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum period
(the "Minimum Holding Period"), if any, to be set from time to time by a
majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make service
fee payments ("Advance Service Fee Payments") to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at a rate
not to exceed (i) 0.25% of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of business
on the day such Shares are sold, constituting Qualified Holdings sold by
the Recipient during that quarter and owned beneficially or of record by
the Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than one (1) year,
subject to reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients that are, or
may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the
date such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance Service Fee
Payments, based on the ratio of the time such shares were held to one (1)
year.
The Advance Service Fee Payments described in part (i) of the
preceding paragraph may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar quarter.
In addition, the Distributor shall make asset-based sales charge payments
to any Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.1875% (0.75% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares computed as of the close of each business day
constituting Qualified Holdings owned beneficially or of record by the
Recipient or its Customers for a period of more than one (1) year.
However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal or
exceed, at the end of such quarter, the minimum amount ("Minimum Qualified
Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time
to time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth
above, and/or direct the Distributor to increase or decrease the Minimum
Holding Period or the Minimum Qualified Holdings. The Distributor shall
notify all Recipients of the Minimum Qualified Holdings or Minimum Holding
Period, if any, and the rates of Recipient Payments hereunder applicable
to Recipients, and shall provide each Recipient with written notice within
thirty (30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current prospectus
shall constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits to
which the Distributor is, or may become, subject under Article III,
Section 26, of the NASD Rules of Fair Practice. The distribution
assistance and administrative support services to be rendered by the
Distributor in connection with the Shares may include, but shall not be
limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sell Shares, and/or paying
such persons Advance Service Fee Payments in advance of, and/or greater
than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing
or providing such financing from its own resources, or from an affiliate,
for the interest and other borrowing costs of the Distributor's
unreimbursed expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to
current Shareholders) and state "blue sky" registration expenses; and (v)
providing any service rendered by the Distributor that a Recipient may
render pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services rendered in
connection with Shares acquired (i) by purchase, (ii) in exchange for
shares of another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board
should have reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support services in
connection with the sale of Shares, then the Distributor, at the request
of the Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources (which
may include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OMC), from its own
resources, from Asset Based Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan
does not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the Distributor.
In no event shall the amounts to be paid to the Distributor exceed the
rate of fees to be paid by the Fund to the Distributor set forth in
paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be Trustees of
the Fund who are not "interested persons" of the Fund ("Disinterested
Trustees") shall be committed to the discretion of such Disinterested
Trustees. Nothing herein shall prevent the Disinterested Trustees from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the
Fund shall provide at least quarterly written reports to the Fund's Board
for its review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be provided
quarterly and shall state whether all provisions of Section 3 of this Plan
have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by a vote of a majority of
the Independent Trustees or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Plan has been approved by a vote of the Board and its Independent Trustees
cast in person at a meeting called on April 18, 1995 for the purpose of
voting on this Plan, and takes effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in
effect from year to year from the date first set forth above or as the
Board may otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the Class
C Shareholders, in the manner described above, and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor is entitled
to payment from the Fund of all or a portion of the Service Fee and/or the
Asset-Based Sales Charge in respect of Shares sold prior to the effective
date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Fund under this Plan
are not binding upon any Trustee or shareholder of the Fund personally,
but bind only the Fund and the Fund's property. The Distributor
represents that it has notice of the provisions of the Declaration of
Trust of the Fund disclaiming shareholder and Trustee liability for acts
or obligations of the Fund.
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
By: /s/ Robert G. Zack
----------------------------------
Robert G. Zack, Assistant Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
---------------------------------
Katherine P. Feld, Vice President & Secretary
Oppenheimer Limited-Term Government Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are
calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Income
Class A Shares
03/31/86 0.0835000 0.0000 10.560
04/30/86 0.0968000 0.0000 10.460
05/30/86 0.0821000 0.0000 10.330
06/30/86 0.0673000 0.0000 10.350
07/31/86 0.0882000 0.0000 10.430
08/29/86 0.0771000 0.0000 10.620
09/30/86 0.0721000 0.0033 10.500
10/31/86 0.0834000 0.0027 10.600
11/28/86 0.0653000 0.0089 10.770
12/31/86 0.0776000 0.0026 10.770
01/30/87 0.0751000 0.0081 10.840
02/27/87 0.0775000 0.0064 10.840
03/31/87 0.0707000 0.0088 10.740
04/30/87 0.0718000 0.0014 10.310
05/29/87 0.0670000 0.0047 10.190
06/30/87 0.0691000 0.0035 10.280
07/31/87 0.0728000 0.0047 10.220
08/31/87 0.0644000 0.0029 10.070
09/30/87 0.0697000 0.0000 9.720
10/30/87 0.0705000 0.0037 9.980
11/30/87 0.0715000 0.0000 10.050
12/31/87 0.0818000 0.0000 10.080
01/29/88 0.0678000 0.0000 10.370
02/29/88 0.0775000 0.0000 10.400
03/31/88 0.0851000 0.0000 10.240
04/30/88 0.0707000 0.0000 10.110
05/31/88 0.0713000 0.0000 9.970
06/30/88 0.0728000 0.0000 10.150
07/29/88 0.0724000 0.0000 10.050
08/31/88 0.0716000 0.0000 9.990
09/30/88 0.0727000 0.0000 10.140
10/31/88 0.0733000 0.0000 10.270
11/30/88 0.0738000 0.0000 10.060
12/30/88 0.0789000 0.0000 9.920
01/31/89 0.0706000 0.0000 10.000
02/28/89 0.0745000 0.0000 9.870
03/31/89 0.0804000 0.0000 9.800
04/28/89 0.0711000 0.0000 9.890
05/31/89 0.0755000 0.0000 10.090
06/30/89 0.0793000 0.0000 10.290
07/31/89 0.0707000 0.0000 10.370
08/31/89 0.0760000 0.0000 10.190
09/29/89 0.0774000 0.0000 10.170
10/31/89 0.0742000 0.0000 10.300
11/28/89 0.0689000 0.0000 10.330
12/29/89 0.0803000 0.0000 10.310
01/31/90 0.0747814 0.0000 10.160
02/28/90 0.0687114 0.0000 10.130
03/31/90 0.0699998 0.0000 10.090
04/30/90 0.0743303 0.0000 9.950
05/31/90 0.0746956 0.0000 10.150
06/29/90 0.0777131 0.0000 10.230
07/31/90 0.0723585 0.0000 10.320
08/31/90 0.0823358 0.0000 10.190
09/28/90 0.0673692 0.0000 10.180
10/31/90 0.0727164 0.0000 10.200
11/30/90 0.0808407 0.0000 10.330
12/31/90 0.0681017 0.0000 10.440
01/31/91 0.0783065 0.0000 10.500
02/28/91 0.0747562 0.0000 10.490
03/28/91 0.0781908 0.0000 10.480
04/30/91 0.0757259 0.0000 10.500
05/31/91 0.0755207 0.0000 10.490
06/28/91 0.0620867 0.0000 10.440
07/31/91 0.0690000 0.0000 10.490
08/30/91 0.0710580 0.0000 10.630
09/30/91 0.0615000 0.0000 10.750
10/31/91 0.0730000 0.0000 10.800
11/29/91 0.0728009 0.0000 10.830
12/31/91 0.0691008 0.0000 11.130
01/31/92 0.0732125 0.0000 10.810
02/28/92 0.0627001 0.0000 10.780
03/31/92 0.0628505 0.0000 10.690
04/30/92 0.0646637 0.0000 10.690
05/29/92 0.0654686 0.0000 10.830
06/30/92 0.0663112 0.0000 10.920
07/31/92 0.0701033 0.0000 10.940
08/31/92 0.0606374 0.0000 10.960
09/30/92 0.0645706 0.0000 10.970
10/30/92 0.0699545 0.0000 10.810
11/30/92 0.0647536 0.0000 10.740
12/31/92 0.0611165 0.0000 10.810
01/29/93 0.0592500 0.0000 10.910
02/26/93 0.0616820 0.0000 10.940
03/31/93 0.0629625 0.0000 10.930
04/30/93 0.0654777 0.0000 10.960
05/28/93 0.0570559 0.0000 10.920
06/30/93 0.0593520 0.0000 11.030
07/30/93 0.0607871 0.0000 11.020
08/31/93 0.0560480 0.0000 11.100
09/30/93 0.0554467 0.0000 11.040
10/29/93 0.0503994 0.0000 11.050
11/30/94 0.0481631 0.0000 10.930
12/31/93 0.0490647 0.0000 10.950
01/31/94 0.0590745 0.0000 10.980
02/28/94 0.0631240 0.0000 10.970
03/31/94 0.0744039 0.0000 10.790
04/29/94 0.0624594 0.0000 10.530
05/31/94 0.0624444 0.0000 10.530
06/30/94 0.0669156 0.0000 10.510
07/29/94 0.0615000 0.0000 10.530
08/31/94 0.0615009 0.0000 10.490
09/30/94 0.0615000 0.0000 10.400
10/31/94 0.0615000 0.0000 10.380
11/30/94 0.0615000 0.0000 10.290
12/30/94 0.0638000 0.0000 10.240
01/31/95 0.0638000 0.0000 10.320
02/28/95 0.0638000 0.0000 10.410
03/31/95 0.0638000 0.0000 10.430
04/28/95 0.0655000 0.0000 10.440
05/31/95 0.0655000 0.0000 10.480
06/30/95 0.0655000 0.0000 10.450
07/31/95 0.0655000 0.0000 10.410
08/31/95 0.0625000 0.0000 10.440
09/29/95 0.0625000 0.0000 10.440
Class B Shares
05/28/93 0.0350596 0.0000 10.940
06/30/93 0.0478994 0.0000 11.040
07/30/93 0.0491367 0.0000 11.030
08/31/93 0.0482353 0.0000 11.120
09/30/93 0.0474955 0.0000 11.060
10/29/93 0.0423858 0.0000 11.070
11/30/93 0.0406397 0.0000 10.940
12/31/93 0.0417019 0.0000 10.970
01/31/94 0.0515718 0.0000 11.000
02/28/94 0.0562719 0.0000 10.980
03/31/94 0.0654003 0.0000 10.810
04/29/94 0.0557253 0.0000 10.540
05/31/94 0.0546722 0.0000 10.540
06/30/94 0.0588565 0.0000 10.530
07/29/94 0.0544822 0.0000 10.540
08/31/94 0.0549325 0.0000 10.500
09/30/94 0.0554696 0.0000 10.410
10/31/94 0.0561056 0.0000 10.390
11/30/94 0.0559285 0.0000 10.290
12/30/94 0.0579904 0.0000 10.250
01/31/95 0.0581829 0.0000 10.320
02/28/95 0.0582142 0.0000 10.410
03/31/95 0.0569194 0.0000 10.430
04/28/95 0.0600766 0.0000 10.440
05/31/95 0.0595759 0.0000 10.480
06/30/95 0.0594431 0.0000 10.440
07/31/95 0.0592789 0.0000 10.410
08/31/95 0.0554580 0.0000 10.440
09/29/95 0.0553693 0.0000 10.440
Class C Shares
02/28/95 0.0464346 0.0000 10.400
03/31/95 0.0567388 0.0000 10.420
04/28/95 0.0591782 0.0000 10.440
05/31/95 0.0575040 0.0000 10.470
06/30/95 0.0580004 0.0000 10.440
07/31/95 0.0578878 0.0000 10.400
08/31/95 0.0547113 0.0000 10.440
09/29/95 0.0551876 0.0000 10.430
Oppenheimer Limited-Term Government Fund
Page 6
1. Average Annual Total Returns for the Periods Ended 09/30/95:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 3.50%:
One Year Five Year
$1,042.49 1 $1,424.24 .2
(---------) - 1 = 4.25% (---------) - 1 = 7.33%
$1,000 $1,000
Inception
$2,058.66 .1047
(---------) - 1 = 7.85%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge
of 4.00% for the first year, and 2.00% for the inception year:
One Year Inception
$1,031.79 1 $1,081.12 .4152
(---------) - 1 = 3.18% (---------) - 1 = 3.29%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00%:
Inception
$1,044.66 1.5063
(---------) - 1 = 6.80%
$1,000
Oppenheimer Limited-Term Government Fund
Page 7
1. Average Annual Total Returns for the Periods Ended 09/30/95 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,080.29 1 $1,475.86 .2
(---------) - 1 = 8.03% (---------) - 1 = 8.10%
$1,000 $1,000
Inception
$2,133.34 .1047
(---------) - 1 = 8.25%
$1,000
Class B Shares
One Year Inception
$1,071.78 1 $1,100.15 .4152
(---------) - 1 = 7.18% (---------) - 1 = 4.04%
$1,000 $1,000
Class C Shares
Inception
$1,054.66 1.5063
(---------) - 1 = 8.35%
$1,000
2. Cumulative Total Returns for the Periods Ended 09/30/95:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 3.50%:
One Year Five Year
$1,042.49 - $1,000 $1,424.24 - $1,000
------------------ = 4.25% ------------------ = 42.42%
$1,000 $1,000
Inception
$2,058.66 - $1,000
------------------ = 105.87%
$1,000
Oppenheimer Limited-Term Government Fund
Page 8
2. Cumulative Total Returns for the Periods Ended 09/30/95 (Continued):
Class B Shares
Examples, assuming a maximum contingent deferred sales charge
of 4.00% for the first year, and 2.00% for the inception year:
One Year Inception
$1,031.79 - $1,000 $1,081.12 - $1,000
------------------ = 3.18% ------------------ = 8.11%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00%:
Inception
$1,044.66 - $1,000
------------------ = 4.47%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,080.29 - $1,000 $1,475.86 - $1,000
------------------ = 8.03% ------------------ = 47.59%
$1,000 $1,000
Inception
$2,133.34 - $1,000
------------------ = 113.33%
$1,000
Class B Shares
One Year Inception
$1,071.78 - $1,000 $1,100.15 - $1,000
------------------ = 7.18% ------------------ = 10.02%
$1,000 $1,000
Class C Shares
Inception
$1,054.66 - $1,000
------------------ = 5.47%
$1,000
Oppenheimer Limited-Term Government Fund
Page 9
3. Standardized Yield for the 30-Day Period Ended 09/30/95:
The Fund's standardized yields are calculated using the
following formula set forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
The symbols above represent the following factors:
a = Dividends and interest earned during the 30-day period.
b = Expenses accrued for the period (net of any expense
reimbursements).
c = The average daily number of Fund shares outstanding during
the 30-day period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
e = The Fund's net asset value (excluding contingent deferred
sales charge) per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 3.50%:
$1,960,479.16 - $251,615.67 6
2{(--------------------------- + 1) - 1} = 6.13%
31,309,292 x $10.82
Class B Shares
Example at NAV:
$ 661,988.86 - $158,696.88 6
2{(--------------------------- + 1) - 1} = 5.53%
10,573,717 x $10.44
Class C Shares
Example at NAV:
$ 79,219.85 - $ 19,160.06 6
2{(--------------------------- + 1) - 1} = 5.52%
1,266,296 x $10.43
Oppenheimer Limited-Term Government Fund
Page 10
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 09/30/95:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = a x 12 / b or c
The symbols above represent the following factors:
a = The accrual dividend earned during the period.
b = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share
on the last day of the period.
Examples:
Class A Shares
Dividend Yield
at Maximum Offering $.0625000 x 12
---------------- = 6.93%
$10.82
Dividend Yield
at Net Asset Value $.0625000 x 12
---------------- = 7.18%
$10.44
Class B Shares
Dividend Yield
at Net Asset Value $.0553693 x 12
---------------- = 6.36%
$10.44
Class C Shares
Dividend Yield
at Net Asset Value $.0551876 x 12
---------------- = 6.35%
$10.43
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Andrew J. Donohue or Robert G. Zack, and each of them, her
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for her and in her capacity as a trustee
of OPPENHEIMER LIMITED-TERM GOVERNMENT FUND, a Massachusetts business
trust (the "Fund"), to sign on her behalf any and all Registration
Statements (including any post-effective amendments to Registration
Statements) under the Securities Act of 1933, the Investment Company Act
of 1940 and any amendments and supplements thereto, and other documents
in connection thereunder, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, and each of them, may lawfully do or cause to be done by
virtue hereof.
Dated this 24th day of October, 1995.
/s/ Bridget A. Macaskill
- --------------------------------
Bridget A. Macaskill
